KIRLOSKAR BROTHERS INVESTMENTS LIMITED

KIRLOSKAR BROTHERS INVESTMENTS LIMITED

ANNUAL REPORT 2011 - 2012

Invisible yet Omnipresent

t Kirloskar we believe in working silently yet relentlessly towards one

definite goal- Enriching Lives. You may not spot us easily, but we are

always around you, fulfilling your every need. Be it the power that lights up your

world, the fluids that flow in numerous industries, water that quenches thirst,

the engines that power innumerable equipments, gensets that provide critical

back-up power, compressors that help CNG reach to millions and refrigeration

that preserves food. Kirloskar works silently and reliably to make sure your life is

hassle-free. And, in our inconspicuous presence lies, our true commitment to

engineering that enriches your lives.

A

Annual Report for the financial year ended on 31 March 2012

BOARD OF DIRECTORS

Mr. Atul C. Kirloskar Chairman

Mr. A. C. Kulkarni Executive Director

Mr. Nihal G. Kulkarni

Mr. A. N. Alawani

Mr. A. R. Sathe

Mr. G. P. Kulkarni (resigned w.e.f. 22 May 2012)

ASSISTANT COMPANY SECRETARY

Mr. Aniket Deshpande

AUDITORS

M/s. P. G. Bhagwat, Chartered Accountants

BANKERS

HDFC Bank Limited

REGISTRAR & SHARE TRANSFER AGENT

Link Intime India Private LimitedndBlock No. 202, 2 Floor, Akshay Complex,

Near Ganesh Temple,

Off Dhole Patil Road, Pune - 411 001

Tel.: +91 (20) 2616 0084 / 2616 1629

Fax: +91 (20) 2616 3503

Email: [email protected]

REGISTERED OFFICE

13/A, Karve Road, Kothrud, Pune - 411 038

Tel.: +91 (20) 2545 3002

Fax: +91 (20) 2543 4262

Email : [email protected]

Website: www.kbil.co.in

Information for shareholders

Annual General Meeting

Day & Date : Friday, 20 July 2012

Time : 11.00 a.m.

Venue : S. M. Joshi Socialist Foundation

(S. M. Joshi Hall)

S. No. 191/192, Navi Peth,

Near Ganjave Chowk,

Pune - 411 030

Proposed Dividend : 40% (` 4/- per share)

Date of Book Closure 10 July 2012 to 20 July 2012

(Both days inclusive)



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Contents Page No.

Directors' Report 3

Report on Corporate Governance 8

Auditors' Report 19

Balance Sheet 22

Profit & Loss Statement 23

Cash Flow Statement 24

Notes to Accounts 25

Statement Relating to Subsidiary Companies 39

Consolidated Financial Statements 45



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Directors’ Report

To the Members,

Your Directors have pleasure in presenting the Third Annual Report with the Audited Annual Accounts of the Company for the

year ending 31 March 2012.

AMALGAMATION OF POOJA CREDITS PRIVATE LIMITED WITH THE COMPANY

The Hon’ble High Court of Judicature at Bombay vide its Order dated 18 November 2011 approved the Scheme of

Amalgamation of Pooja Credits Private Limited (“PCPL”) with the Company. The certified true copy of the Order received on 1

December 2011 has been filed with Registrar of Companies, Pune on 5 December 2011 (Effective Date).

In terms of the said Scheme, all the assets and liabilities of the PCPL as on 1 April 2011 (Appointed Date) were transferred to

the Company. Also, the investments of the Company in the shares of the PCPL, appearing in the books of accounts of the

Company were cancelled. The authorised capital of the Company is also increased by an amount of ` 4/- Crores and

resultantly stands at 14/- Crores.

FINANCIAL RESULTS

(` In lakhs)

Particulars Year ended Year ended

31 March 2012 31 March 2011

Total Income 15,620.48 3,057.02

Total Expenditure 171.23 92.74

Profit before taxation 15,449.25 2,964.28

Provision for tax (including Deferred Tax) 2,356.89 76.36

Net Profit 13,092.36 2,887.92

Balance of Profit/(Loss) from previous year 4,156.57 2,288.69

Balance of Profit of PCPL as per Scheme of Amalgamation 2022.97 –

Balance available for appropriation 19,271.90 5,176.61

Appropriations

Transfer to Reserve Fund in terms of Section 45-IC

of the Reserve Bank of India Act, 1934 2,618.47 577.58

Transfer to General Reserves 1,309.24 288.79

Proposed Dividend 211.55 132.22

Tax on Proposed Dividend – 21.45

Balance carried to Balance Sheet 15,132.64 4,156.57

DIVIDEND

Your Directors recommend 40% dividend i.e. ` 4/- per equity share (previous year 25% i.e. ` 2.50 per equity share) for the

financial year ended 31 March 2012.

MANAGEMENT DISCUSSION AND ANALYSIS

The Company commenced business in February 2011 after qualifying as a Core Investment Company – Non Banking

Financial Company (CIC-NBFC). Majority of the investments of the Company is in the form of strategic investments in

Kirloskar Group Companies. During the year under review the Company has formed an Investment Committee of the Board

of Directors for considering the options for investment of available surplus funds.

During the year under review, on account of acquisition of equity shares of Kirloskar Oil Engines Limited (KOEL) and

Kirloskar Pneumatic Company Limited (KPC) and as a result of Amalgamation of Pooja Credits Private Limited with the

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Company, KOEL and KPC have become subsidiaries of the Company. Consequently, the dividends declared by the

Company, to the extent of dividends received from KOEL and KPC are exempt from payment of Dividend Distribution Tax.

COMPANY PERFORMANCE

During the financial year under review, your Company achieved an income of ` 156.20 Crores (previous year ` 30.57

Crores). The net profit after tax is 130.92 Crores (previous year 28.88 Crores).

OPERATIONS OF THE COMPANY

The main operations of the Company are that of an investment company, and majority of the investments of the Company are

in the nature of strategic investments in Kirloskar Group Companies. The investment pattern of the Company also complies

with the requirement for the Company continuing to qualify as a Core Investment Company – Non Banking Financial

Company (CIC-NBFC). The source of income for the Company is in the form of dividends as declared by these companies.

HUMAN RESOURCES

As on 31 March 2012, the Company has 6 employees on its roll, including the Executive Director and Assistant Company

Secretary. During the year under review, the organization structure and human resource policies have been put in place.

CONCERNS AND THREATS

• Fluctuations in the securities market and global economic scenario, may pose a risk of devaluation of the investments

made by the Company.

• Only source of income for the Company is dividend, mainly from its Subsidiary Companies.

• The risks and concerns associated with the businesses/operations of these investee companies, which may impact the

performance of these companies, could result in variation in dividends declared by these companies.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control systems to ensure operational efficiency, accuracy and promptness in financial

reporting and compliance of various laws and regulations.

The internal control system is supported by the internal audit process. An Internal Auditor has been appointed for this

purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal

controls periodically.

CAUTIONARY STATEMENT

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the

Company’s objectives, projections, estimates and expectations may constitute “forward looking statements” within the

meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

LISTING FEES

The annual listing fees for the year under review have been paid to BSE Limited and National Stock Exchange of India

Limited, where your Company’s shares are listed.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As on 31 March 2012, the Company has three subsidiaries viz. Nashik Silk Industries Limited, Kirloskar Oil Engines Limited

and Kirloskar Pneumatic Company Limited.

The Board presents audited consolidated financial statements incorporating the duly audited financial statements of the

subsidiaries and as prepared in compliance with the Accounting Standards and Listing Agreement as prescribed by

Securities and Exchange Board of India (SEBI).



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The Central Government vide its Circular dated 8 February 2011 issued directions under Section 212 of the Companies Act,

1956, granting general permission to all the companies for not attaching the Annual Accounts of Subsidiary Companies

under certain conditions.

Accordingly, the Board of Directors of the Company at its meeting held on 24 May 2012 decided not to attach the Annual

Accounts of its subsidiaries. The Company has attached to the Annual Accounts, the audited consolidated financial

statements as required by the said Circular.

Further, the Company undertakes that the Annual Accounts of the Subsidiary Companies and the related detailed

information shall be made available to the shareholders on demand, at any point of time. The Annual Accounts of the

Subsidiary Companies shall also be kept open for inspection by any shareholder at the Registered Office of the Company.

A. Nashik Silk Industries Limited (NSIL)

NSIL was incorporated on 5 May 1992 as Kirloskar Silk Industries Limited. The name of the Company was changed to

Nashik Silk Industries Limited.

NSIL was incorporated with the main object of manufacturing, development and sale of raw silk. However, the said

project was implemented but was subsequently discontinued, as it was not financially feasible.

NSIL has approached the Government Authorities seeking their approval for change of purpose of the land allotted to

the Company. The application is pending with the Government Authorities. The Board of Directors of NSIL decided to

pursue the said application and hence, deferred the decision of disposal of land and existing business.

B. Kirloskar Oil Engines Limited (KOEL)

KOEL is in the business of manufacturing of Diesel Engines and is having manufacturing facilities at Pune, Nashik,

Kagal, and Rajkot.

The Company has a presence in international markets, with offices in UAE, South Africa and Kenya, as well as

representatives in Indonesia and Nigeria and a strong distribution network throughout the Middle East and Africa.thPune and Kagal plants received the prestigious ‘12 National Award for Excellence in Energy Management 2011’ from

Confederation of Indian Industries (CII).

The Board of Directors of KOEL has recommended a final dividend of 4/- (200%) per equity share for the year ended

March 31, 2012 as against 4/- (200%) per equity share paid last year.

On 30 September 2011, KOEL hived off its bearings business division, for a purchase consideration of ` 87/- Crores,

resulting in a profit of 47.71 Crores.

The Board of Directors of KOEL in its meeting held on 25 January 2012, had approved a buyback of fully paid up equity

shares of the Company by way of open market purchases through stock exchange route at a maximum price of 170/-

and the buyback amount not exceeding 73.63 Crores. This represents 10% of total paid up capital and free reserves

as per the latest audited balance sheet as on 31 March 2011.

The buyback commenced on 5 March 2012 and will remain open till 24 January 2013 or any earlier date on which the

buyback to the extent of ` 73.63 Crores is completed. However, in case Minimum Offer Shares (10,82,721 nos.) are

purchased under the buyback, the Board at its discretion may close the buyback by giving appropriate notice in this

regard.

KOEL has achieved sales of 2,276/- Crores (including sales of bearings business of 62/- Crores) as against 2,364/-

Crores in the previous year, (including sales of bearings business of ` 123/- Crores). The profit before tax is ` 281/-

Crores (including profit on sale of bearings business 48 Crores) in 2011-12 against 244/- Crores in the previous year

2010-11.

C. Kirloskar Pneumatic Company Limited (KPC)

KPC is in the business of manufacturing of Air Compressors, Compressors for Refrigeration and Air Conditioning, Gas

Compressor packages, Hydraulic power transmission products.

KPC has achieved a net sale of 666.61 Crores during the year as against ` 491.73 in last year. This 36% increase in

revenue growth over the previous year has also contributed to a Profit before Tax growth of 23.05 Crores.

The Board of Directors of the Company has recommended a final dividend of 12/- (120%) per equity share for the year

ended 31 March 2012 as against 12/- (120%) per equity share paid last year.

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KPC has successfully delivered its largest Centrifugal Compressor based Refrigeration System for the first Coal

Gasification Plant in India.

KPC’s exports grew from 12.9 Crores to 31.9 Crores over the previous year.

KPC has received National level award for Excellence in Energy Management from CII on 1 December, 2011.

KPC has also received a State level award for Excellence in Energy Conservation and Management from Maharashtra

Energy Development Agency on 13 March 2012 for the year 2008-09.

During the year Kirloskar RoadRailer Limited (KRL) has become subsidiary of KPC and the manufacturing facility has

been set up at Nashik and the actual production will commence in the current financial year.

The consolidated financial statement is prepared as per applicable provisions, and duly audited by the statutory auditors, is

presented elsewhere in this Annual Report.

STATUTORY DISCLOSURES

(a) Conservation of energy and technology absorption

The Company being an Investment Company, there are no particulars regarding conservation of energy and

technology absorption, as required under Section 217 (1) (e) of the Companies Act, 1956 and Companies (Disclosure of

Particulars in the Report of Board of Directors) Rules, 1988.

(b) Foreign exchange earnings and outgo

Total foreign exchange used Nil

Total foreign exchange earned 0.24 Crores

PARTICULARS OF EMPLOYEES

The Company has no particulars to report as required under the provisions of Sub-Section (2A) of Section 217 of the

Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and Notification dated 31 March 2011

issued by Central Government.

DIRECTORS

Mr. G. P. Kulkarni resigned as Director with effect from 22 May 2012. The Board places on record its sincere appreciation for

the valuable services rendered by Mr G. P. Kulkarni.

Mr. A. N. Alawani and Mr. Nihal G. Kulkarni retire by rotation at the ensuing Annual General Meeting and being eligible, offer

himself for re-appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed/re-appointed, as required to

be disclosed under Clause 49 of the Listing Agreement, form part of the Report on Corporate Governance.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

• In the preparation of the annual accounts, the applicable accounting standards have been followed and there was no

material departure from the accounting standards.

• Accounting policies have been selected and applied consistently and that the judgments and estimates made are

reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31 March 2012 and

of the profits of the Company for such period.

• Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the

provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting

fraud and other irregularities, and

• The annual accounts have been prepared on a going concern basis.

CASH FLOW

A cash flow statement for the year ended 31 March 2012 is attached to the Balance Sheet.



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FIXED DEPOSITS

Your Company has not accepted any fixed deposits during the year.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with the Stock Exchanges, a report on Corporate Governance forms

part of this Annual Report. The Company has obtained the certificate from its Statutory Auditors regarding compliance with

the provisions relating to Corporate Governance as laid down in Clause 49 of the Listing Agreement. The same is appearing

elsewhere in this Annual Report.

Declaration by the Executive Director regarding affirmation for compliance with the Company’s Code of Conduct is annexed

to the Corporate Governance Report.

AUDITORS

M/s. P. G. Bhagwat, Chartered Accountants (Firm’s Registration No. 101118W), Statutory Auditors of the Company, retire at

the ensuing Annual General Meeting and are eligible for re-appointment. The requisite certificate as per Section 224 (1B) of

the Companies Act, 1956, has been received by the Company. The Audit Committee has recommended their re-

appointment.

ACKNOWLEDGMENTS

Your Directors wish to place on record, their appreciation for the contribution made and support provided to the Company by

the shareholders, employees and bankers, during the year under the report.

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR

Pune : 24 May 2012 CHAIRMAN

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Report on Corporate Governance(Pursuant to Clause 49 of the Listing Agreement)

1. The Company’s philosophy on Code of Corporate Governance

The Company strongly believes that the system of Corporate Governance protects the interest of all the stakeholders by

inculcating transparent business operations and accountability from management towards fulfilling the highest

standards of Corporate Governance in all facets of the Company’s operations.

2. Board of Directors

a. Composition of the Board

As on 31 March 2012, the strength of the Board was six Directors, comprising of one Executive Director and five

Non-Executive Directors. Three out of six Directors were Independent Directors, which duly complied with the

requirements of Clause 49 of the Listing Agreement.

b. Number of Board Meetings

During the financial year under review, four Board Meetings were held on 26 April 2011, 22 July 2011, 18 October

2011 and 24 January 2012.

c. Director’s attendance record and directorships held

The information on composition and category of the Board of Directors as on 31 March 2012, attendance of each

Director at Board Meetings held during the financial year 2011-12 and the Annual General Meeting (AGM) held on

22 July 2011, Directorships and Committee positions in other public companies of which the Director is a Member /

Chairman and the shareholding of Non-Executive Directors is as follows:

No. of No. of

shares held Directorships No. of Committee

Sr. Name of Director by Non- in other positions held in other Attendance

No. Executive public public companies** at the meetings

Directors companies

Chairman Member Board AGM

Executive Director

1. Mr. A. C. Kulkarni – 2 Nil Nil 4 Present

Non-Executive Director

2. Mr. Atul C. Kirloskar* 10,33,909 8 1 Nil 3 Absent

3. Mr. Nihal G. Kulkarni* – 3 Nil 3 4 Present

Independent and

Non-Executive Directors

4. Mr. A. N. Alawani 500 6 2 3 4 Present

5. Mr. A. R. Sathe 30 4 Nil 4 4 Present

6. Mr. G. P. Kulkarni – 3 Nil Nil 4 Present

Notes:

* Deemed as Promoters within the meaning of Securities Exchange Board of India (SEBI) (Substantial Acquisition of Shares and

Takeover) Regulations, 2011.

** For this purpose only Audit and Investors' Grievance Committee positions of the public limited companies are considered.

(1) As on 31 March 2012, none of the current Directors are related to any other Director within the meaning of Section 6 of the Companies

Act, 1956.

(2) Directorships in private limited companies, foreign companies and companies under Section 25 of the Companies Act, 1956 are

excluded in the above table.



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d. Information supplied to the Board

Among others, this includes:

• Quarterly results of the Company;

• Materially important show cause, demand, prosecution and penalty notices;

• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems;

• Any material relevant default in financial obligations to any by the Company, or substantial non-payment to

the Company by any;

• Any issue, which involves possible liability claims of substantial nature;

• Details of any joint venture or collaboration agreement;

• Significant development in human resources and industrial relation fronts;

• Non-compliance of any regulatory, statutory provision or listing requirements as well as shareholders service

such as non-payment of dividend and delay in share transfer.

3. Audit Committee

a) Composition

The Audit Committee comprises of three Non-Executive Directors, majority of who are Independent. The Assistant

Company Secretary acts as the Secretary to the Committee. The Executive Director also attends the Audit

Committee Meetings. The representatives of the Internal Auditors and Statutory Auditors are also invited to the

meetings.

During the financial year under review, four meetings of the Committee were held on 26 April 2011, 22 July 2011,

18 October 2011 and 24 January 2012. The composition of the Committee and attendance at its meetings is given

below

Sr. No. Name of the Member Director Number of meetings attended

1. Mr. A. N. Alawani (Chairman) – Independent 4

2. Mr. A. R. Sathe – Independent 4

3. Mr. Nihal G. Kulkarni – Non Independent 4

b) Terms of Reference

The terms of reference of the Audit Committee include the matters specified in clause 49 (II) of the Listing

Agreement entered into with the Stock Exchanges as well as those in Section 292A of the Companies Act, 1956

and, inter-alia, includes the following:

1. Supervision of the Company’s financial reporting process and the disclosure of its financial information to

ensure that the financial statements are correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal

of the Statutory Auditor and the fixation of audit fees and also approval for payment of any other services.

3. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public

issue, rights issue, preference issue etc.), the statement of funds utilised for the purposes other than those

stated in the offer document / prospectus / notice and the report submitted by the monitoring agency

monitoring the utilisation of proceeds of public or rights issues, and making appropriate recommendations to

the Board to take up steps in this matter.

4. Reviewing, with the management, the annual financial statements before submission to the Board for

approval, with particular reference to:

a. Matters required to be included in the Directors’ Responsibility Statement to be included in the Board’s

Report in terms of clause (2AA) of Section 217 of the Companies Act, 1956.

b. Changes, if any, in accounting policies and practices and reasons for the same.

c. Major accounting entries involving estimates based on the exercise of judgment by management.

d. Significant adjustments made in the financial statements arising out of audit findings.

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e. Compliances with listing and other legal requirements relating to financial statements.

f. Disclosure of any related party transactions.

g. Qualifications in the draft Audit Report.

h. Review Auditor's Report, internal controls and recommendations relating thereto.

5. Reviewing, with the management, the quarterly financial statements before submission to the Board for

approval.

6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal

control system.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit

department, staffing and seniority of the official heading the department, reporting structure coverage and

frequency of internal audit.

8. Discussion with internal auditors about any significant findings and follow up there on.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is

suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the

matter to the Board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well

as post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,

shareholders (in case of non-payment of declared dividends) and creditors.

12. Review of the following:

a. Management discussion and analysis of financial condition and results of operations;

b. Statement of significant related party transactions (as defined by the Audit Committee), submitted by the

management;

c. Management letters / letters of internal control weaknesses issued by the statutory auditors;

d. Internal audit reports relating to internal control weaknesses;

e. The appointment, removal and terms of remuneration of the Chief Internal Auditor;

f. Financial statements, in particular, the investments made by the unlisted subsidiary;

g. Minutes of Board Meetings of the unlisted subsidiary company; and

h. A statement of significant transactions and arrangements entered into by the unlisted subsidiary.

13. Carrying out any other function as is mentioned in the terms of reference of Audit Committee as amended from

time to time by the Listing Agreement and the Companies Act, 1956.

c) Powers of Audit Committee

1. To investigate any activity within its terms of reference.

2. To seek information from any employee.

3. To obtain outside legal or other professional advice.

4. To secure attendance of outsiders with relevant expertise, if it considers necessary.

4. Remuneration Committee

a) Composition

The Remuneration Committee was constituted by the Board of Directors of the Company at its meeting held on 13

February 2010. The Committee comprises of three Independent Directors, namely:

Mr. A. R. Sathe, Chairman

Mr. A. N. Alawani, Member

Mr. G. P. Kulkarni, Member



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During the financial year under review, one meeting of the Remuneration Committee was held on 26 April 2011. All

the above named Directors were present during the meeting.

b) Remuneration to Directors

The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and

commission (variable component) to its Executive Director. The Board also decides the commission payable to the

Executive Director on determination of the profits for the financial year, within the ceilings prescribed under

Sections 198 and 309 of the Companies Act, 1956. An Agreement for a period of five years has been entered into

with the Executive Director. There is no notice period and severance fee prescribed in the Agreement.

The Board of Directors decides the remuneration to Non-Executive Directors by way of commission, based on their

attendance and contribution at the meetings. The members of the Company at the first Annual General Meeting

held on 27 July 2010, approved the payment of remuneration by way of commission to the Non-Executive

Directors of the Company, not exceeding 1% of the net profits of the Company as computed in the manner laid

down in Sections 349 and 350 of the Companies Act, 1956.

The sitting fee of ` 5,000/- per meeting of the Board and any Committee thereof, attended by the Non-Executive

Directors is payable to them.

c) Details of remuneration paid to Directors during the financial year 2011-12

Amount in `

Executive Director

1. Mr. A. C. Kulkarni 22,83,186 82,396 6,16,856 – 20,00,000 49,82,438

Non-Executive Directors

2. Mr. Atul C. Kirloskar – – – 15,000 30,000 45,000

3. Mr. Nihal G. Kulkarni – – – 50,000 1,00,000 1,50,000

4. Mr. A. N. Alawani – – – 55,000 1,10,000 1,65,000

5. Mr. A. R. Sathe – – – 50,000 1,00,000 1,50,000

6. Mr. G. P. Kulkarni – – – 30,000 60,000 90,000

Notes:

• Perquisites include reimbursement of medical expenses, leave travel, term insurance premium and

provision for leave encashment.

• Contribution to Statutory Funds includes contribution to Provident Fund and Superannuation Fund.

5. Investment Committee

The Investment Committee was constituted by the Board of Directors of the Company at its meeting held on 18 October

2011. The committee comprises of three Directors, namely:

• Mr. A. N. Alawani, Chairman

• Mr. Nihal G. Kulkarni, Member

• Mr. A. C. Kulkarni, Member

During the financial year, two meetings of the Investment Committee were held on 1 November 2011 and 17 February

2012.

6. Investors' Grievance Committee

The Investors' Grievance Committee has been constituted to look into investor’s complaints like transfer of shares, non-

receipt of Balance Sheet, non-receipt of declared dividends etc, and redressal thereof. The Committee is headed by

Mr. G. P. Kulkarni, an Independent Director, with Mr. A. C. Kulkarni, Executive Director and Mr. A. R. Sathe, an

Independent Director being the other Members of the Committee.

Sr.

No.Name of the Director Basic Salary Perquisites

Contribution to

Statutory Funds

Sitting

FeesCommission Total

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During the financial year under review, one Investors' Grievance Committee Meeting was held on 18 October 2011. All

the above Directors were present during the Meeting.

Mr. Aniket Deshpande, Assistant Company Secretary is the Compliance Officer.

The Compliance Officer can be contacted at:

Kirloskar Brothers Investments Limited

13 / A, Karve Road, Kothrud,

Pune – 411 038

Tel.: (020) 2545 3002; Fax: (020) 2543 4262

E-mail: [email protected]; [email protected]

With reference to clause 47(f) of the Listing Agreement, the Company has designated exclusive e-mail id for the

investors as [email protected] to register their grievances, if any. This has been initiated by the Company to resolve

such investors’ grievances immediately. The Company has also displayed the said e-mail id on its website for the use of

investors.

The total number of complaints received and replied to the satisfaction of the shareholders during the year ended 31

March 2012 were 3 and there were no complaints outstanding as on 31 March 2012.

7. General Body Meeting

Previous General Meetings of the shareholders of the Company were held as under-

Financial Year Date Type of Meeting Venue Time

2010-11 22 July 2011 Annual General S. M. Joshi Socialist Foundation (S. M. Joshi Hall) 3.00 p.m.

Meeting S. No. 191 / 192, Navi Peth, Near Ganjve Chowk,

Pune – 411 030

2009-10 27 July 2010 Annual General Kirloskar Brothers limited, ‘Yamuna’, S. No. 98 (3-7), 1.30 p.m.

Meeting Baner, Pune – 411 045

In the previous General Meetings, Special Resolutions were passed by the shareholders in respect of the following

matters;

1. Authorising the Board of Directors of the Company to decide and pay the remuneration by way of commission to

the Non-Executive Directors of the Company.

2. Authorising the Board of Directors of the Company to decide and pay the remuneration by way of commission to

the Executive Director of the Company.

No Special Resolution passed at the above Annual General Meetings were required to be passed through postal ballot.

8. Disclosures

i. During the financial year under review, there were no materially significant related party transactions made by the

Company with its Promoters, Directors, Management or their Subsidiaries that may have potential conflict with the

interest of the Company at large.

Transactions with the related parties are disclosed in Note No. C-1 of the Accounts in the Annual Report.

ii. There have been no instances of non-compliances by the Company on any matters related to capital markets

since its incorporation i.e. 16 April 2009. Neither penalties have been imposed nor any strictures imposed on the

Company by the Stock Exchanges, Securities and Exchange Board of India (SEBI) or any other statutory authority,

on any matter related to capital markets.

iii. Whistle Blower Policy

The Company has formulated and implemented the Whistle Blower Policy (“the Policy”). This would, inter alia,

provide a mechanism for employees of the Company and other persons dealing with the Company to report to the

Chairman of the Audit Committee; any instance of unethical behavior, actual or suspected fraud or violation of the

Company’s Code of Conduct. Thus, any employee has direct access to the Audit Committee.

The Policy has been communicated to all the employees of the Company and the same has also been uploaded on

the Company’s website.



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iv. Disclosure pursuant to amended Clause 5A II of the Listing Agreement

The Securities and Exchange Board of India (SEBI) vide its circular dated 16 December 2010, effected certain

amendments to the Equity Listing Agreement. By inserting the new Clause 5A II, certain provisions have been

introduced, containing uniform procedure for dealing with unclaimed shares.

Pursuant to the said Clause, the Company had sent first reminder on 22 February 2011 to all those shareholders,

whose shares remained unclaimed with the Company, requesting them to forward correct addresses to avoid

transfer of such unclaimed shares to the “Unclaimed Suspense Account”.

The Company had sent second reminder on 28 March 2012 to such shareholders whose share certificates were

undelivered and hence remained unclaimed.

The details of shares claimed by the shareholders based on the second reminder during the year are as follows:

Sr. No. Particulars No. of shares

i. Total number of unclaimed shares as on 1 April 2011 97,118

ii. Number of shares claimed by the respective shareholders during the year 5,115

iii. Balance number of shares remaining unclaimed as on 31 March 2012 92,003

v. The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement. The extent of

adoption of non-mandatory requirements is as follows:

Non-mandatory requirements

a. Remuneration Committee

Remuneration Committee is already in place and complying with related non-mandatory requirements.

b. Shareholders’ Rights

Since the Company publishes its quarterly results in newspapers (English and Marathi) having wide circulation,

and since the results are also displayed on the website of the Company and that of Stock Exchanges, the

Company does not send any declaration of half yearly performance to the shareholders.

c. Audit qualifications

There are no qualifications on the Financial Statements of the Company for the year ended 31 March 2012.

d. Whistle Blower Policy

The Company has a Whistle Blower Policy. It inter alia, provides a mechanism for the employees of the Company

and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of

unethical behavior, actual or suspected fraud or violation of the Company’s code of conduct. It also provides for

adequate safeguard against victimisation of such employees. Further, the existence of the mechanism has been

appropriately communicated within the Organisation.

9. Particulars of Director to be re-appointed at the ensuing Annual General Meeting

Mr. A. N. Alawani

Mr. A. N. Alawani is a Chartered Accountant by profession. He has work experience of over 30 years in Import, Export

and Labour matters besides his core area of Finance, Taxation, Financial Restructuring and Company Law. His abilities

in Corporate Tax Planning and Finance helped various organisations in which he was employed. He has retired as

Director (Finance) from Kirloskar Oil Engines Limited on 31 August 2005.

He is a member of the Audit Committee of the Company.

Mr. A.N. Alawani is a Director in following other companies:

Kirloskar Brothers Limited @ Kirloskar Industries Limited* #

Kothrud Power Equipment Limited Kirloskar Integrated Technologies Limited

Kirloskar Oil Engines Limited Kirloskar Ferrous Industries Limited @**

* Audit Committee – Chairman ** Audit Committee – Member

@ Share Transfer and Investors’ Grievance Committee – Member

# Share Transfer and Investors’ Grievance Committee – Chairman

14

Mr. A. N. Alawani is holding 500 (0.01%) equity shares of the Company.

Mr. A. N. Alawani is not related to any of the Directors on the Board of the Company as per provisions of Section 6 of the

Companies Act, 1956.


Mr. Nihal G. Kulkarni, A.B. in Economics from Brown University, USA, has over six years of experience in the areas of

finance and investments. He has undergone extensive training with the Kirloskar Group, Toyota Motor Sales, USA and

DSP Merrill Lynch. He was Vice President in Kirloskar Pneumatic Company Limited upto 22 October 2010. He was the

Managing Director of Kirloskar Industries Limited from 23 October 2010 upto 25 January 2012. He has been appointed

as Managing Director of Kirloskar Oil Engines Limited with effect from 26 January 2012. He is the Vice Chairman and

Director of G. G. Dandekar Machine Works Limited and also a Director on the Boards of Kirloskar Industries Limited and

G. G. Dandekar Investments Pte. Limited, a wholly owned subsidiary of G. G. Dandekar Machine Works Limited,

incorporated in Singapore.

Mr. Nihal G. Kulkarni is a Director in the following other companies:

G. G. Dandekar Machine Works Limited** @ Kirloskar Oil Engines Limited

G. G. Dandekar Investments Pte. Limited Kirloskar Industries Limited**

** Audit Committee – Member

@ Share Transfer cum Shareholder’s Grievance Committee - Member

Mr. Nihal G. Kulkarni is not holding any equity shares of the Company.

Mr. Nihal G. Kulkarni is not related to any other Director on the Board of the Company as per provisions of Section 6 of

the Companies Act, 1956.

10. Means of Communication

a. The quarterly and half yearly results are published in national and local dailies, namely Financial Express (English)

and Loksatta (Marathi), having wide circulation. Since the results of the Company are published in the

newspapers, half yearly reports are not sent individually to the shareholders.

b. The Company's results and official news releases are displayed on the Company’s website namely www.kbil.co.in.

c. The Management Discussion and Analysis Report forms part of this Annual Report.

11. General shareholder Information

Annual General Meeting

Date and Time 20 July 2012 at 11.00 a.m.

Venue S. M. Joshi Socialist Foundation (S. M. Joshi Hall)

S. No. 191 / 192, Navi Peth, Near Ganjave Chowk, Pune 411 030

Financial Year 1 April 2011 to 31 March 2012

During the year the financial results were announced as under:

First quarter : 22 July 2011

Second quarter : 18 October 2011

Third quarter : 24 January 2012

Annual : 24 May 2012

Date of Book Closure 10 July 2012 to 20 July 2012 (Both days inclusive)

Dividend payment date On or before 6 August 2012

Listing on Stock Exchanges

(Stock Code) Sr. No. Name of the Stock Exchange Stock Code

1. BSE Limited (BSE), Mumbai 533297

2. National Stock Exchange of India Limited (NSE), Mumbai KBIL



15

Market Price Data

Details of Monthly high / low during the year 2011-12 on the BSE and NSE

Stock Exchange BSE Limited National Stock Exchange of India Limited

Month High (`) Low (`) High (`) Low (`)

April 2011 620.90 487.00 599.90 421.15

May 2011 672.00 500.10 625.00 503.00

June 2011 650.00 505.10 644.95 509.00

July 2011 857.00 600.00 800.00 600.00

August 2011 796.95 600.00 790.00 576.40

September 2011 698.70 600.00 718.00 611.05

October 2011 670.00 603.00 729.00 600.00

November 2011 700.00 562.50 700.00 560.00

December 2011 750.00 566.60 775.00 570.00

January 2012 700.00 630.00 706.90 640.00

February 2012 729.00 660.00 720.00 620.00

March 2012 775.00 700.00 750.00 700.00

0

20

40

60

80

100

120

140

160

Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

Quotes on BSE index to 100

KBIL

Sensex

SENSEX v/s KBIL

Performance of the Company’s scrip on the BSE as compared to the BSE Sensex

Distribution of shareholding as on 31 March 2012

Nominal value of shares (`) Shareholders Share Amount

From To Number % to total In ` % to total

1 - 5000 14,462 97.78 5,622,790 10.63

5001 - 10000 161 1.09 1,100,990 2.08

10001 - 20000 87 0.59 1,213,540 2.29

20001 - 30000 22 0.15 570,680 1.08

30001 - 40000 6 0.04 206,270 0.39

40001 - 50000 11 0.07 505,740 0.96

50001 - 100000 21 0.14 1,322,010 2.50

100001 - Above 21 0.14 42,345,160 80.07

TOTAL 14,791 100.00 52,887,180 100.00

16

Shareholding Pattern as on 31 March 2012

Sr. No. Category No. of shares % of shareholding

1. Promoters’ Holding

Indian Promoters 3,518,559 66.53

Bodies Corporate 5,016 0.09

2. Non Promoters’ Holding

Mutual funds 15,311 0.29

Financial Institutions / Banks 153,989 2.91

Insurance Companies 93,828 1.77

Foreign Institutional Investors 141,871 2.68

Private Corporate Bodies 320,792 6.07

Indian Public 10,29,401 19.46

Non Resident Indians 12,915 0.24

Clearing Members 2,052 0.04

TOTAL 52,88,718 100.00

Registrar and Share Transfer Agent (R and T Agent)

The entire work of the Company, relating to processing of transfer of shares has been given to an outside agency i.e.

M/s Link Intime India Private Limited, being a SEBI Registered R & T Agent. The contact details are as follows:

Link Intime India Private Limited

(Unit : Kirloskar Brothers Investments Limited)ndBlock No. 202, 2 Floor, Akshay Complex,

Near Ganesh Temple, Off Dhole Patil Road,

Pune – 411 001

Tel.: (020) 2616 0084

Fax: (020) 2616 3503

Email: [email protected]

Share Transfer System

a. The applications for transfer of shares lodged at the Company’s Registrar and Share Transfer Agent in physical

form are processed within 30 days of receipt of valid and complete documents in all respects. After such

processing, the Registrar and Share transfer agent will issue share certificate to the respective shareholders within

30 days of receipt of certificate for transfer. Shares under objection are returned within a week’s time. The transfer

applications are approved periodically by the Senior Management of the Company.

b. Pursuant to the Listing Agreement, a certificate on half yearly basis is issued by the Practicing Company Secretary

for compliance with share transfer formalities by the Company.

Register Your National Electronic Clearing Service (NECS) Mandate

The Reserve Bank of India (RBI) has initiated NECS for credit of Dividend directly to the Bank Account of shareholders

Shareholders holding shares in electronic mode are requested to register their latest Bank Account details with their

Depository Participant and in physical form with the Company’s R & T Agent viz. Link Intime India Private Limited.

Dematerialisation of shares and liquidity

As on 31 March 2012, 4,891,877 equity shares being 92.50% of the total equity share capital of the Company were held

in dematerialised form with National Securities Depository Limited (NSDL) and Central Depository Services (India)

Limited (CDSL). The International Securities Identification Number (ISIN) allotted to the Company’s equity shares is

INE920K01010.



17

Outstanding GDR / ADR / Warrants or any convertible instruments, conversion date and impact on equity

Not applicable.

Address for correspondence

Shareholders’ correspondence should be addressed to Link Intime India Private Limited, Registrar and Share Transfer

Agent, at the address mentioned above. Shareholders can also email their queries / grievances to the following email

address:

[email protected]

DECLARATION FOR COMPLIANCE WITH CODE OF CONDUCT

To the members of KIRLOSKAR BROTHERS INVESTMENTS LIMITED

Pursuant to clause 49 I (D) (ii) of the Listing Agreement, I hereby declare that all the Board Members and Senior Management

Personnel are aware of the provisions of the Code of Conduct laid down by the Board as made effective from 2 March 2010.

All Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct.

For Kirloskar Brothers Investments Limited

A. C. Kulkarni

Executive Director

Pune : 24 May 2012

18

REPORT OF THE AUDITORS ON CORPORATE GOVERNANCE TO THE MEMBERS

To the members of KIRLOSKAR BROTHERS INVESTMENTS LIMITED

We have examined the compliance of conditions of Corporate Governance by Kirloskar Brothers Investments Limited for the

year ended on 31st March 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock

Exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was

limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of

the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company

has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or

effectiveness with which the management has conducted the affairs of the Company.

For M/s P. G. BHAGWAT

Chartered Accountants

Firm's Registration No: 101118W

ABHIJEET BHAGWAT

Partner

Membership No. 136835

Pune : 24 May 2012



19

AUDITOR’S REPORT TO THE MEMBERS OF


1. We have audited the attached balance sheet of Kirloskar Brothers Investments Limited as at 31st March 2012, the

profit and loss account and the cash flow statement of the Company for the period ended on that date, annexed thereto.

These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an

opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures

in the financial statements. An audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 [as amended by Companies (Auditor’s Report)

(Amendment) Order, 2004] issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the

Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said

Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(i) we have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(ii) in our opinion proper books of account as required by law have been kept by the Company so far as appears from

our examination of those books;

(iii) the balance sheet, the profit and loss account and cash flow statement dealt with by this report are in agreement

with the books of account;

(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply,

in all material aspects; read with Note No. Part C 6 (iii) to the financial statements in respect of accounting and

disclosures under Accounting Standard 15 (revised) not being practicable, comply with the accounting standards

referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;

(v) on the basis of the written representations received from the Directors as on 31st March, 2012, and taken on

record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from

being appointed as a Director in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956;

(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read

together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so

required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2012;

(b) in the case of the profit and loss account of the profit for the period ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the period ended on that date.




ABHIJEET BHAGWAT

Partner


Pune : 24 May 2012

20

ANNEXURE Re: KIRLOSKAR BROTHERS INVESTMENTS LIMITED

Referred to in paragraph 3 of our report of even date

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and

situation of fixed assets.

(b) The fixed assets have been physically verified by the Management at reasonable intervals. According to the

information and explanation given to us, no discrepancies were noticed on such verification.

(c) No fixed assets are disposed off during the year.

(ii) As the Company has no manufacturing activity, the provisions of clause 4 (ii) of the Order, 2003 are not applicable to

the Company.

(iii) (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in

the register maintained as per Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4

(iii) (b) (c) and (d) of the Order are not applicable to the Company.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered

in the register maintained as per Section 301 of the Companies Act, 1956. Accordingly, the provisions of

clause 4 (iii) (f) and (g) of the Order are not applicable to the Company.

(iv) Being an Investment Company, in our opinion and according to the information and explanations given to us, there is

an adequate internal control system commensurate with the size of the Company and the nature of its business with

regard to the purchase of fixed assets. During the course of audit we have not observed any continuing failure or

continuing failure to correct major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, there were no contracts or arrangements referred

to in Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (v) (b) of the Order are not

applicable to the Company.

(vi) According to information and explanations given to us, the Company has not accepted any deposits from

public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its

business.

(viii) Being an Investment Company, the provisions of clause 4 (viii) of the Order, 2003 related to maintenance of cost

records are not applicable to the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including

provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax,

wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

According to information and explanation given to us, no undisputed amounts payable in respect of statutory

dues were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became

payable.

(b) According to information and explanation given to us, there are no dues of income tax, sales tax, wealth tax,

service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute other

than those mentioned in the Appendix to this report.

(x) The Company has no accumulated losses as at 31st March, 2012. The Company has not incurred cash losses during

the financial year and in the immediately preceding financial year.

(xi) According to information and explanations given to us, the Company has no dues to any financial institution, bank or

debenture holders. Accordingly, the provisions of clause 4 (xi) of the Order, 2003 are not applicable to the

Company.

(xii) According to information and explanation given to us, the Company has not granted loans and advances on the basis

of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of

the Order, 2003 are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of

clause 4 (xiii) of the Order, 2003 are not applicable to the Company.

(xiv) According to information and explanation given to us, the Company is dealing in, but not trading in, shares, securities,



21

debentures and other investments. Accordingly, proper records have been maintained of the transactions and

contracts and timely entries have been made therein. Also the shares, securities, debentures and other investments

have been held by the Company, in its own name.

(xv) According to information and explanation given to us, the Company has not given guarantees for loans taken by

others from banks or financial institutions.

(xvi) According to information and explanation given to us, the Company does not have any term loans.

(xvii) According to information and explanation given to us, we report that no funds raised on short-term basis have been

used for long-term investment.

(xviii) According to information and explanation given to us, the Company has not made any preferential allotment of any

shares to parties and companies covered under Section 301 of the Companies Act, 1956.

(xix) According to information and explanation given to us, the Company has not issued any debentures. Accordingly, the

provisions of clause 4 (xix) of the Order, 2003 are not applicable to the Company.

(xx) According to information and explanation given to us, the Company has not made any public issue to raise money.

Accordingly, the provisions of clause 4 (xx) of the Order, 2003 are not applicable to the Company.

(xxi) According to information and explanation given to us, no fraud on or by the Company has been noticed or reported

during the course of our audit.




ABHIJEET BHAGWAT

Partner


Pune : 24 May 2012

Appendix [referred to in clause (ix) (b) of the annexure to the Auditor’s Report]

Sr. No. Name of Statute Amount (`) Forum where dispute is pending

1. Income Tax Act, 1961 1,328,877/- Centralized Processing Centre (CPC) , Bangalore

For IT A.Y. 2006-2007

(in respect of Pooja Credits Private Limited,

amalgamated with Kirloskar Brothers Investments

Limited w.e.f. 05.12.2011)

2. Income Tax Act, 1961 7,639,830/- Centralized Processing Centre (CPC) , Bangalore

For IT A.Y. 2009-2010

(in respect of Pooja Credits Private Limited,

amalgamated with Kirloskar Brothers Investments

Limited w.e.f. 05.12.2011)

22

BALANCE SHEET AS AT MARCH 31, 2012

[in `]

Particulars Figures as at the Figures as at theNote end of current reporting end of previous reportingNo. year ended on year ended on

March 31, 2012 March 31, 2011

I. EQUITY AND LIABILITIES1 Shareholders' funds

(a) Share capital A – 1 52,887,180 52,887,180(b) Reserves and surplus A – 2 2,564,147,843 1,065,394,614(c) Money received against share warrants – –

2,617,035,023 1,118,281,7942 Share application money pending allotment – –3 Non-current liabilities

(a) Long-term borrowings – –(b) Deferred tax liabilities (Net) – –(c) Other Long term liabilities – –(d) Long term provisions – –

– –4 Current liabilities

(a) Short-term borrowings – –(b) Trade payables 247,814 224,371(c) Other current liabilities A – 3 3,723,065 1,964,148(d) Short-term provisions A – 4 22,510,415 15,665,038

26,481,294 17,853,557TOTAL 2,643,516,317 1,136,135,351

II. ASSETS1 Non-current assets

(a) Fixed assets(i) Tangible assets A – 5 762,093 936,718(ii) Intangible assets – –(iii) Capital work-in-progress – –(iv) Intangible assets under development – –

(b) Non-current investments A – 6 2,531,321,434 588,376,791(c) Deferred tax assets (Net) C – 7 – 274,155(d) Long term loans and advances A – 7 635,585 –(e) Other non-current assets – –

2,532,719,112 589,587,6642 Current assets

(a) Current investments – –(b) Inventories – –(c) Trade receivables – –(d) Cash and bank balances A – 8 110,576,914 545,659,652(e) Short-term loans and advances A – 9 44,744 2,000(f) Other current assets A – 10 175,547 886,035

110,797,205 546,547,687TOTAL 2,643,516,317 1,136,135,351

The Notes referred in Part A - Notes to Accounts, Part B - Significant Accounting Policies and Part C - Other Notes form an integral part of the Balance Sheet

As per our attached report of even date For and on behalf of the Board of Directors

For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNIChartered Accountants Chairman Executive Director

ABHIJEET BHAGWAT ANIKET DESHPANDEPartner Assistant Company Secretary

Pune : 24 May 2012



23

PROFIT & LOSS STATEMENT FOR THE YEAR ENDED MARCH 31, 2012

[in `]

Particulars Figures for Figures forNote current reporting previous reportingNo. year ended on year ended on

March 31, 2012 March 31, 2011

I Revenue from operations A – 11 1,559,903,254 305,702,412

II Other income A – 12 2,144,906 –

III Total revenue (I + II) 1,562,048,160 305,702,412

IV Expenses:Cost of materials consumed – –Purchase of Stock-in-Trade – –Changes in inventories of finished goods, work-in-progress and Stock-in-Trade – –Employee benefits expense A – 13 6,369,964 5,274,797Financial costs – –Depreciation and amortization expense A – 5 265,114 262,970Other expenses A – 14 10,487,895 3,736,397

Total expenses 17,122,973 9,274,164

V Profit before exceptional and extraordinary items and tax (III – IV) 1,544,925,187 296,428,248

VI Exceptional Items – –

VII Profit before extraordinary items and tax (V – VI) 1,544,925,187 296,428,248

VIII Extraordinary Items – –

IX Profit before tax (VII – VIII) 1,544,925,187 296,428,248

X Tax expenses:(1) Current tax 235,415,000 7,910,000(2) Deferred tax C – 7 274,155 (274,155)

235,689,155 7,635,845

XI Profit / (Loss) for the period from continuing operations (IX – X) 1,309,236,032 288,792,403

XII Profit / (Loss) from discontinuing operations – –

XIII Tax expense of discontinuing operations – –

XIV Profit / (Loss) from discontinuing operations (XII – XIII) – –

XV Profit / (Loss) for the period (XI + XIV) 1,309,236,032 288,792,403

XVI Earning per equity share having nominal value of ` 10 / - per share:(1) Basic C – 2 247.55 54.61(2) Diluted C – 2 247.55 54.61

The Notes referred in Part A - Notes to Accounts, Part B - Significant Accounting Policies and Part C - Other Notes form an integral part of the Profit and Loss Statement




Pune : 24 May 2012

24

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012

[in ]

Particulars Figures for Figures for

current reporting previous reporting

year ended on year ended on

March 31, 2012 March 31, 2011

A. Cash Flow from Operating Activities

Net Profit before taxation and extra ordinary items 1,544,925,187 296,428,248

Adjustments for

Investments written off 500,000 –

Provisions written back (2,144,906) –

Depreciation and amortization expense 265,114 262,970

(Profit) / Loss on sale of non current Investments (1,144,574,468) 3

Operating profits before working capital changes 398,970,927 296,691,221

Increase / (decrease) in short term provisions (127,780) 229,566

Increase / (decrease) in other current liabilities 460,561 (1,005)

Increase / (decrease) in trade payables 10,208 1,546,635

(Increase) / decrease in long term loans and advances (65,400) –

(Increase) / decrease in short term loans and advances 6,507,256 (15,022)

(Increase) / decrease in other current assets 948,676 (788,907)

Net Cash Flow from Operating Activities 406,704,448 297,662,488

Income Tax (Paid) / Refunded (233,968,992) (7,841,229)

Net Cash from Operating Activities (A) 172,735,456 289,821,259

B. Cash Flow from Investing Activities

(Purchase) / sale of Investments (Net) (701,572,877) 1,003,206

(Purchase) / sale of Fixed Assets (90,489) (1,199,688)

Net Cash from Investment Activities (B) (701,663,366) (196,482)

C. Cash Flow from Financing Activities

Dividends paid (12,799,628) –

Sale of fractional Shares 2,964,001 –

Fractional entitlements paid (2,087,813) –

Net Cash Flow from Financing Activities (C) (11,923,440) –

Net Increase in Cash and Cash Equivalents (A) + (B) + (C) (540,851,350) 289,624,777

Cash and cash equivalents at the beginning of the year 545,659,652 256,034,875

Addition on account of Scheme of Amalgamation (Refer note C – 8) 105,768,612 –

651,428,264 256,034,875

Cash and cash equivalents at the end of the year (Refer note A – 8) 110,576,914 545,659,652

`




Pune : 24 May 2012



25

PART A : NOTES TO ACCOUNTS

[in `]

Figures as at the Figures as at the

end of current reporting end of previous reporting


March 31, 2012 March 31, 2011

NOTE A - 1 : SHARE CAPITAL

Authorised

14,000,000 (10,000,000) Equity Shares of

` 10/- each (` 10/- each) 140,000,000 100,000,000

(Increased due to Amalgamation of

Pooja Credits Private Limited with the Company)

TOTAL 140,000,000 100,000,000

Issued, Subscribed And Paid–up

5,288,718 (5,288,718) Equity Shares of

` 10/- each (` 10/- each) 52,887,180 52,887,180

TOTAL 52,887,180 52,887,180

(a) Reconciliation of Share Capital

Particulars Figures as at the end of Figures as at the end of

the current reporting year the previous reporting year

ended on March 31, 2012 ended on March 31, 2011

No. of Shares ` No. of Shares `

Shares outstanding at the

beginning of the year 5,288,718 52,887,180 5,288,218 52,882,180

Add / (Less) : Shares issued – – 500 5,000

(for consideration other than cash)


end of the year 5,288,718 52,887,180 5,288,718 52,887,180

(b) The Company has only one class of equity shares, having par value of 10/- per share. Each holder of equity share is

entitled for one vote per share and has a right to receive dividend as recommended by the Board of Directors subject to

the necessary approval from the shareholders. In the event of liquidation of the Company, the holders of equity shares

will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution

will be in proportion to the number of equity shares held by the equity shareholders.

(c) For the year ended March 31, 2012, the Board of Directors have proposed dividend of 4/- per share (March 31, 2011

` 2.50 per share).

26

(d) Details of shareholders holding more than 5% shares

Name of the shareholder Figures as at the end of Figures as at the end of



No. of Shares % of holding No. of Shares % of holding

Mr. Rahul Chandrakant Kirloskar 1,034,383 19.56 764,932 14.46

Mr. Gautam Achyut Kulkarni 1,035,751 19.58 766,967 14.50

Mr. Atul Chandrakant Kirloskar 1,033,909 19.55 764,589 14.46

Kirloskar Industries Limited – – 551,309 10.42

TOTAL 3,104,043 58.69 2,847,797 53.84

(e) Aggregate number of shares allotted as fully paid up without payment being received in cash persuant to Scheme of

Arrangement between Kirloskar Brothers Limited and Kirloskar Brothers Investments Limited and their respective

shareholders under Section 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956 are 5,288,718

(5,288,718) equity shares of 10/- each ( 10/- each).`

PART A : NOTES TO ACCOUNTS (CONTD.)

[in `]




March 31, 2012 March 31, 2011

NOTE A - 2 : RESERVES AND SURPLUS

General Reserve

Opening Balance 591,979,550 563,105,310

Add : Transfer as per Scheme of Amalgamation (Refer note C - 8) 8,375,434 –

Add : Transfer from Surplus 130,923,603 28,879,240

Less : Written off – 5,000

731,278,587 591,979,550

Reserve Fund

In terms of Section 45-IC of the Reserve Bank of India Act, 1934

Opening Balance 57,758,481 –


319,605,687 57,758,481

Surplus

Opening Balance 415,656,583 228,868,602

Add : Transfer as per Scheme of Amalgamation (Refer note C - 8) 202,296,635 –

Add : Transfer from Profit and Loss Statement 1,309,236,032 288,792,403

Amount available for appropriation 1,927,189,250 517,661,005

Less : Appropriations

Proposed Dividend 21,154,872 13,221,795

Tax on Proposed Dividend (Refer note C - 12) – 2,144,906

Transfer to Reserve Fund in terms of Section 45-IC of the

Reserve Bank of India Act, 1934 261,847,206 57,758,481

Transfer to General Reserve 130,923,603 28,879,240

Balance in Profit & Loss Statement 1,513,263,569 415,656,583

TOTAL 2,564,147,843 1,065,394,614



27

[in `]




March 31, 2012 March 31, 2011

NOTE A - 3 : OTHER CURRENT LIABILITIES

Other payables

TDS payable 21,711 21,178

Superannuation fund contribution payable 2,998 2,970

Salary and commission 2,400,000 1,940,000

Investor Education and Protection Fund (will be credited as and when due)

Unpaid Dividend 422,168 –

Unpaid Fractional entitlements 876,188 –

TOTAL 3,723,065 1,964,148

NOTE A - 4 : SHORT TERM PROVISIONS

Provision for employee benefits

Leave encashment 101,786 123,571

Gratuity – 105,995

Others

Proposed Dividend 21,154,872 13,221,795

Tax on Proposed Dividend (Refer note C - 12) – 2,144,906

Provision for Taxation (Net of Advance Income Tax) 1,253,757 68,771

TOTAL 22,510,415 15,665,038

NOTE A 5 : TANGIBLE ASSETS

[in `]

Particulars Tangible Assets

Motor Car Computers Office TotalEquipments

Gross Block

At 01.04.2010 – – – –

Additions 1,070,000 96,388 33,300 1,199,688

As at 31.03.2011 1,070,000 96,388 33,300 1,199,688

Additions – 42,421 48,068 90,489

As at 31.03.2012 1,070,000 138,809 81,368 1,290,177

Depreciation/Amortization

At 01.04.2010 – – – –

Charge for the year 241,352 21,529 89 262,970

At 31.03.2011 241,352 21,529 89 262,970

Charge for the year 215,124 43,581 6,409 265,114

At 31.03.2012 456,476 65,110 6,498 528,084

Net Block

At 31.03.2011 828,648 74,859 33,211 936,718

At 31.03.2012 613,524 73,699 74,870 762,093

-


28

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[in

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29

[in `]




March 31, 2012 March 31, 2011

NOTE A - 7 : LONG TERM LOANS AND ADVANCES

Other Loans and advances

Unsecured, considered good –

Advances to Employees 24,400 –

Advance to Employees Group Superannuation Trust 41,000 –

Advance income tax (net of provision) 570,185 –

TOTAL 635,585 –

NOTE A - 8 : CASH AND BANK BALANCES

Cash and cash equivalents

Cash on Hand 18,433 14,001

Balance with banks 109,260,125 545,645,651

Earmarked balance with bank –

Unpaid dividend account 422,168 –

Unpaid fractional entitlement account 876,188 –

TOTAL 110,576,914 545,659,652

NOTE A - 9 : SHORT TERM LOANS AND ADVANCES

Other Loans and advances

Unsecured, considered good –

Advances to Employees 15,400 2,000

Provision for Gratuity (Refer note C – 6) 29,344 –

TOTAL 44,744 2,000

NOTE A - 10 : OTHER CURRENT ASSETS

Interest Accrued on Fixed Deposits with Bank 166,177 873,013

Prepaid Expenses 9,370 13,022

TOTAL 175,547 886,035


30

[in `]

Figures for Figures for



March 31, 2012 March 31, 2011

NOTE A - 11 : REVENUE FROM OPERATIONS

Interest income

On fixed deposits 37,926,858 28,862,371

On loan to subsidiary 439,295 23,433

Profit on sale of long term investments 1,144,574,468 –

Dividend income from long term Investments

From subsidiary companies 372,693,966 –

From other companies 4,268,667 276,816,608

TOTAL 1,559,903,254 305,702,412

NOTE A - 12 : OTHER INCOME

Other non operating income

Provision written back (Refer note C - 12) 2,144,906 –

TOTAL 2,144,906 –

NOTE A - 13 : EMPLOYEE BENEFITS EXPENSE

Salaries 5,541,014 4,700,328

Contribution to provident and other funds 810,455 448,143

Gratuity 4,458 110,240

Welfare expenses 14,037 16,086

TOTAL 6,369,964 5,274,797




31

[in `]




March 31, 2012 March 31, 2011

NOTE A - 14 : OTHER EXPENSES

Rent 303,587 302,174

Rates and Taxes 53,124 47,309

Royalty 105,000 105,000

Legal and Professional Fees 1,059,037 328,482

Payment to Auditor (Refer note C - 3) 199,127 265,548

Filing and application fees 297,521 174,531

Directors' Fees 200,000 220,000

Directors' Commission 400,000 440,000

Printing and publication 771,747 1,213,912

Travelling and Conveyance 336,809 233,476

Postage and Telephone 536,669 363,327

Other miscellaneous expenses 209,112 35,791

Investments Written off 500,000 –

Donations 5,020,000 –

Bank Charges 496,162 6,847

TOTAL 10,487,895 3,736,397

PART B : SIGNIFICANT ACCOUNTING POLICIES

NOTE B - 1 : BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) The financial statements of the Company have been prepared in accordance with generally accepted

accounting principles in India. The financial statements have been prepared to comply in all material respects

with the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act,

1956.

b) The financial statements have been prepared under the historical cost convention on an accrual basis.

c) The accounting policies applied by the Company are consistent with those used in the previous year except for

the change in accounting policy explained below.

NOTE B - 2 : CHANGE IN ACCOUNTING POLICY

Presentation and disclosure of financial statements

During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act, 1956 has become

applicable to the Company for preparation of its financial statements. Except accounting for dividend on investment in

subsidiary companies the adoption of revised schedule VI does not impact recognition and measurement principles

followed for preparation of financial statements. The Company has also reclassified the previous year figures in

accordance with requirements applicable in current year.

Dividend on investment in subsidiary companies

The pre-revised schedule VI required companies to recognize dividend declared by the subsidiary companies after

reporting date in the current year’s financial statement of profit and loss if such dividend pertained to the period ending

on or before the reporting date. The revised schedule VI applicable for financial year commencing from April 1, 2011,

does not contain this requirement. Hence the Company now, in accordance with Accounting Standard 9 ‘Revenue


32

Recognition’ recognises dividend as income only when the right to receive the same is established in the reporting

period.

NOTE

The preparation of financial statements in conformity with Indian GAAP requires the management to make

judgments, estimates and assumption that affect the reported amounts of revenue, expenses, current assets, non-

current assets, current liabilities, non–current liabilities and disclosure of the contingent liabilities at the end of

reporting period. Although these estimates are based on management’s best knowledge of current events and

actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material

adjustment to the carrying amount of assets or liabilities in future periods.

NOTE B - 4 : CASH AND CASH EQUIVALENTS

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term, highly liquid

investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of

changes in value.

Cash Flow Statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of

transactions of a non cash nature and any deferral or accruals of past or future cash receipts or payments. The cash

flows from regular operating, investing and financing activities of the Company are segregated.

NOTE B - 5 : DEPRECIATION

Depreciation on fixed assets has been provided in a manner that amortizes the cost of the assets over their estimated

useful lives on written down value method at the rates prescribed by schedule XIV of the Companies Act, 1956.

NOTE B - 6 : REVENUE RECOGNITION

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue

can be reliably measured. Where the ability to assess the ultimate collection with reasonable certainty is lacking at the

time of raising any claim, revenue recognition is postponed to the extent of uncertainty involved. In such cases

revenue is recognised only when it is reasonably certain that the ultimate collection will be made.

a) Interest accrues on the time basis, and is determined by the amount outstanding and the rate applicable.

b) Dividend from investments in shares is not recognised in the statement of profit and loss until a right to receive

payment is established in the reporting year.

NOTE B - 7 : TANGIBLE FIXED ASSETS

Fixed assets are stated at cost less accumulated depreciation. The cost of a fixed asset comprises its purchase price

and any attributable cost of bringing the asset to its working condition for its intended use.

NOTE B - 8 : INVESTMENTS

Investments are classified as trade when investment is made in the shares or debentures of another company for the

purpose of promoting the trade or business of the Company.

Investments that are readily realisable and intended to be held for not more than a year from the date on which such

investment is made are classified as current investments. All other investments are classified as long-term

investments.

a) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

b) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a

decline other than temporary in the value of such investments.

c) On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is

charged or credited to the Profit and Loss Statement.

NOTE B - 9 : EMPLOYEE BENEFITS

Short term compensated absence benefits (both vesting and non-vesting) are accounted for on the basis of the actual

valuation of the leave entitlement as on the balance sheet date.

B - 3 : USE OF ESTIMATES

PART B : SIGNIFICANT ACCOUNTING POLICIES (CONTD.)



33

I. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term

employee benefits. Benefits such as salaries and short term compensated absences are recognised in the

period in which the employee renders the related service.

II. Post-Employment Benefits

a) Defined Contribution Plans

The Company’s approved superannuation scheme and state governed provident fund are defined

contribution plans. The contribution paid / payable under the scheme is recognised during the period in

which the employee renders the related service.

b) Defined Benefit Plans

The employees’ gratuity fund scheme with LIC is the company’s defined benefit plan. The present value of

the obligation under such defined benefit plan is determined based on actuarial valuation using the

Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of

employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used

for determining the present value of the obligation under defined benefit plans, is based on the market

yields on Government securities as at the balance sheet date, having maturity periods approximating to the

terms of related obligations.

Actuarial gains and losses are recognised immediately in the Profit and Loss Statement.

In the funded plan, the fair value of the plan’s assets is reduced from the gross obligation under the defined

benefit plans, to recognise the obligation on net basis.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the

curtailment or settlement occurs. Past service cost is recognised as expenses on a straight-line basis over

the average period until the benefits become vested.

III. Long Term Employee Benefits

The obligation for long term employee benefits such as long term compensated absences is determined in terms

of their entitlement based on the actual completed service at the end of the year.

Accumulated leave that is expected to be utilized within the next 12 months is treated as short term employee

benefits.

NOTE B - 10 : EARNINGS PER SHARE

Basic earnings per share

For the purpose of calculating basic earnings per share, the net profit or loss for the period attributable to equity

shareholders after deducting any attributable tax thereto for the period is divided by weighted number of equity shares

outstanding during the period.

Diluted earnings per share

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity

shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of

all dilutive potential equity shares.

NOTE B - 11 : TAXES ON INCOME

a) Tax on income for the current period is determined on the basis of taxable income after considering the various

deductions available under The Income Tax Act, 1961.

b) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the

year. The tax effect is calculated on the accumulated timing differences at the end of the accounting period

based on prevailing enacted or subsequently enacted regulations.

c) Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for deductible

timing differences only to the extent there is reasonable certainty that sufficient future taxable income will be

available against which such deferred tax assets can be realised. At each reporting date the Company

reassesses the unrecognised deferred tax assets and reviews the deferred tax assets recognised.


34

NOTE

A provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable that

an outflow of resources is expected to settle the obligation, in respect of which a reliable estimate can be made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

NOTE B - 13 : CONTINGENT LIABILITY

A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed

by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or

present obligation that arises from past events that is not recognised because it is not probable that an outflow of

resources will be required to settle the obligation. The contingent liability also arises in extremely rare cases where

there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not

recognise a contingent liability but discloses its existence in the financial statements.

B - 12 : PROVISIONS

PART C : OTHER NOTES

NOTE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed

by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation

made by the Key Management Persons and taken on record by the Board. Disclosure of transaction with Related

Parties are as under :

A. Names of the related parties where control exists

Sr. No. Name of the related company Nature of relationship

1. Nashik Silk Industries Limited Subsidiary Company

2. Kirloskar Pneumatic Company Limited (Refer note C – 9) Subsidiary Company

3. Kirloskar Oil Engines Limited (Refer note C – 9) Subsidiary Company

4. Kirloskar RoadRailer Limited Subsidiary Company of Kirloskar

Pneumatic Company Limited

5. Pooja Credits Private Limited Subsidiary Company -

Upto 31.03.2011

B. Names of the related parties with whom transactions have been entered into

Sr. No. Name of the related party Nature of relationship


2. Kirloskar Pneumatic Company Limited (Refer note C – 9) Subsidiary Company

3. Kirloskar Oil Engines Limited (Refer note C – 9) Subsidiary Company

4. A. C. Kulkarni - Executive Director Key Management Personnel

C - 1 : RELATED PARTY DISCLOSURES




35

C. Related Party Transactions during the period

Sr. Particulars `

No. 2011–12 2010–11

1. Loan Given:

to Nashik Silk Industries Limited – 1,193,185

Transferred from Pooja Credits Private Limited on its 6,550,000 –

Amalgamation with the Company

Interest :

from Nashik Silk Industries Limited 488,600 23,433

7,038,600 1,216,618

2. Loan Repaid:

by Nashik Silk Industries Limited – 1,216,618

3. Investments made:

in Nashik Silk Industries Limited* 13,538,600 –

in Kirloskar Oil Engines Limited 1,048,113,342 403,094

in Kirloskar Pneumatic Company Limited 1,019,196,829 –

4. Dividend received:

Kirloskar Pneumatic Company Limited 77,967,048 –

Kirloskar Oil Engines Limited 294,726,918 –

5. Remuneration paid:

to Executive Director - Mr. A. C. Kulkarni 4,982,438 4,487,917

* Note: Loan given along with outstanding interest (Net), to Nashik Silk Industries Limited was converted into

703,860 equity shares of 7,038,600/- and an additional investment of 6,500,000/- i.e. 650,000 equity shares

was made during the current year.

`

NOTE

Sr. Particulars

No. 2011–12 2010–11

I – Basic

(a) Profit for the year before tax 1,544,925,187 296,428,248

Less : Attributable Tax thereto 235,689,155 7,635,845

Profit after Tax 1,309,236,032 288,792,403

(b) Weighted average number of equity shares

used as denominator 5,288,718 5,288,718

(c) Basic earning per share of nominal value of 10/- each 247.55 54.61

II – Diluted

(a) Profit for the year before tax 1,544,925,187 296,428,248

Less : Attributable Tax thereto 235,689,155 7,635,845

Profit after tax 1,309,236,032 288,792,403

(b) Weighted average number of equity shares

used as denominator 5,288,718 5,288,718

(c) Diluted earning per share of nominal value of 10/- each 247.55 54.61

C - 2 : EARNING PER SHARE (BASIC AND DILUTED)

` `

PART C : OTHER NOTES (CONTD.)

D. Amount due to

Sr. Particulars `

No. 2011–12 2010–11

1. Key Management Personnel

Commission -

to Executive Director - Mr. A. C. Kulkarni 2,000,000 1,500,000

`

36

NOTE

Sr. Particulars `

No. 2011–12 2010–11

Statutory Auditors :

(a) Audit Fees 112,360 132,360

(b) For Tax Audit Fees 27,987 22,060

140,347 154,420

(c) For Certification 58,780 111,128

TOTAL 199,127 265,548

NOTE C - 4 : CONTINGENT LIABILITIES NOT PROVIDED IN RESPECT OF

(i) Demand notice of ` 5,560,121/- issued by Deputy Superintendent of Stamps, Mumbai for stamp duty on

transfer of investments from Kirloskar Brothers Limited to Kirloskar Brothers Investments Limited in terms of the

Scheme of Arrangement. The Company has vide its letter dated 8 May 2010 informed the Stamp Authorities that

the said transfer attracts Nil stamp duty, to which no written communication has been received.

(ii) Income tax demand of ` 1,328,877/- for A.Y. 2006–2007, issued by Centralised Processing Centre (CPC),

Bangalore, in respect of Pooja Credits Private Limited (PCPL), amalgamated with the Company w.e.f.

05 December 2011.

(iii) Income tax demand of ` 7,639,830/- for A.Y. 2009–2010, issued by Centralised Processing Centre (CPC),

Bangalore, in respect of Pooja Credits Private Limited (PCPL), amalgamated with the Company w.e.f.

05 December 2011.

NOTE C - 5 : EARNINGS IN FOREIGN CURRENCIES

Sr. Particulars ` `

No. 2011–12 2010–11

(a) Dividend received 313,633 392,380

(b) Sale of Investment 2,097,628 –

TOTAL 2,411,261 392,380

C-3 : REMUNERATION TO AUDITORS

`

NOTE

(i) Defined Contribution Plans

Amount of 810,455/- ( 448,143/-) is recognised as an expense and included in "Employee Benefits Expense"

(Refer note A - 13) in the Profit and Loss Account.

(ii) Defined Benefit Plans

In previous year, actuarial valuation of defined benefit plan was not obtained, as it was not considered

practicable and material. Hence In table (a), (b) and (c) below, previous year's figures are not mentioned.

C - 6 : EMPLOYEE BENEFITS

`




37

(a) The amounts recognised in Balance Sheet are as follows

[in `]

Sr. Particulars Figures as at the end of

No. the current reporting year

ended on March 31, 2012

Gratuity Plan (Funded)

A. Amount to be recognised in Balance Sheet

Present Value of Defined Benefit Obligation 143,048

Less : Fair Value of Plan Assets 172,392

Amount to be recognised as liability or (asset) (29,344)

B. Amounts reflected in the Balance Sheet

Liabilities –

Assets 29,344

Net liability/(Assets) (29,344)

(b) The amounts recognised in Profit and Loss account are as follows

[in `]

Sr. Particulars Figures as at the end of

No. the current reporting year

ended on March 31, 2012

Gratuity Plan (Funded)

1. Current Service Cost 15,217

2. Past Service Cost –

3. Interest Cost 1,220

4. Expected Return on Plan Assets (3,343)

5. Actuarial Losses / (Gains) 111,366

6. Past Service Cost –

7. Effect of any curtailment or settlement –

8. Actuarial Gain not recognised in books –

9. Amount recognised in earlier years (120,002)

Total included in Note A - 13 4,458

'Employee Benefits Expense'

Actual Return on Planned Assets 1.94%

(c) Broad categories of plan assets as a percentage of total plan assets as at March 31, 2012 of Employee’s

Gratuity Scheme are as under

Sr. Description Percentage

No. 2011–12

1. Central Govt. Securities 36.76%

2. State Govt. Securities 11.83%

3. Govt. Guaranteed Securities 1.59%

4. Bonds / Debentures etc. 43.11%

5. Loans 0.12%

6. Equity Shares 3.46%

7. Fixed Deposits and Money Market 3.13%

TOTAL 100.00%


38

(d) Principal acturial assumptions at the balance sheet date1. Discount rate as at March 31, 2012 – 8%2. Expected return on plan assets – 1.94%3. Salary growth rate – 7%4. The estimate of future salary increases considered in actuarial valuation taken into account inflation,

seniority, promotion and other relevant factors, such as supply and demand in the employment market

(iii) Long term Employee benefit

(a) The amount recognised in Balance Sheet is 101,786/- (`123,571/-).

(b) The amount recognised in Profit and Loss Account is 21,785/- (Cr) (`101,571/- (Dr))

As the Company has only 6 employees as on 31st March 2012, it is not considered practicable or material to

obtain an actuarial valuation for long term laibility on account of leave encashment as per Accounting Standard

15" Employee Benefits". The Company has accounted for the same in the manner specified in note no.

B -9- III.

NOTE

The Company has written off deferred tax asset on timing differences of 274,155/- as on March 31, 2012 since there is no

reasonable certainty that future taxable income will be available against which such deferred tax assets can be realised. The

Company is paying income tax under Minimum Alternative Tax (MAT) (115JB) provisions of the Income Tax Act, 1961 and the

Company expects to continue paying tax under the MAT provisions in the forceable future.

NOTE C - 8

The Hon'ble High Court of Judicature at Bombay has vide Order dated 18 November 2011, approved the Scheme of

Amalgamation (the Scheme) of Pooja Credits Private Limited (PCPL) with the Company. PCPL was a wholly owned

subsidiary of the Company. The Appointed Date as per the Scheme is 01 April 2011 and the Effective Date is 05 December

2011.

Upon coming into effect of the Scheme, all the assets and liabilities relating to PCPL have been transferred and vested with

the Company in accordance with the said Scheme.

NOTE C - 9

During the year the Company has acquired additional equity shares of the following companies and has become the holding

Company of these companies :

– Kirloskar Oil Engines Limited (w.e.f. 24 May 2011)

– Kirloskar Pneumatic Company Limited (w.e.f. 20 May 2011)

NOTE C - 10

Out of the total 75,964,859 Equity Shares of ` 2/- each held in Kirloskar Oil Engines Limited, 29,125,950 equity shares are

under lock–in for a period upto 30 December 2013.

NOTE C - 11

Out of total 6,885,884 Equity Shares of ` 10/- each held in Kirloskar Pneumatic Company Limited, 101,000 equity shares

were purchased on 30 March 2012 and credited to demat account on 4 April 2012.

NOTE C - 12

Provision for Dividend Distribution Tax of ` 2,144,906/- made in March 2011 has been reversed during the year as the

Company is satisfying all the conditions of Section 115-O(1A) of the Income Tax Act, 1961; for claiming reduction of the

dividend amount declared by the subsidiary company from the dividend amount declared by the holding company. For the

current year, amount of proposed dividend from subsidiaries is more than that declared by the Company and hence provision

for Dividend Distribution Tax is not required.

NOTE C - 13

Figures for the current year ended March 31, 2012 includes the financials of Pooja Credits Private Limited on its

amalgamation and as such are not comparable with the figures of the previous year ended March 31, 2011.

NOTE C - 14

Previous year's figures have been regrouped, wherever necessary.

C - 7 : DEFERRED TAX ASSET

`




Pune : 24 May 2012




39

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING

TO SUBSIDIARY COMPANIES :

Sr. Names of the Subsidiaries Nashik Silk Kirloskar Oil Kirloskar Pneumatic

No. Industries Limited Engines Limited Company Limited

(Cosolidated)

1. The Financial year of the Subsidiary Companies ended on March 31, 2012 March 31, 2012 March 31, 2012

2. Holding Company's Interest Controls composition of the Owns Owns

Board and also owns 100% of 52.16% of 53.61% of

Equity Share Capital Equity Share Capital Equity Share Capital

3. Net aggregate amount of Subsidiary's Profits / (Losses) as far

as it concerns members of the holding company not dealt with

the Holding Company's accounts :

(i) Profit / (Loss) for the Subsidiary's financial year

ended March 31, 2012 (468,465) 1,000,500,906 331,890,704

(ii) Profit / (Losses) for its previous financial years since

becoming subsidiary (6,109,868) – –

4. Net aggregate amount of Subsidiary's Profits / (Losses)

dealt with in the Holding Company's accounts :

(i) For the Subsidiary's financial year ended March 31, 2012 – – –

(ii) For its previous financial years – – –

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR A. C. KULKARNI ANIKET DESHPANDEChairman Executive Director Assistant Company Secretary

Pune : 24 May 2012

40

The Central Government has vide its Circular dated 8 February 2011 issued Directions under Section 212 of the Companies

Act, 1956, granting general permission to all the companies for not attaching the documents of its subsidiary companies as

referred to in Section 212 (1) of the Act. Accordingly, the Company is giving the following information in respect of its

subsidiaries for the financial year ended 31 March 2012 and for the corresponding previous year ended 31 March 2011.

Previous years figures in respect of Kirloskar Oil Engines Limited, Kirloskar Pneumatic Company Limited and Kirloskar

RoadRailer Limited are not given as these companies have become subsidiaries during the current year.

[in `]

Particulars Nashik Silk Industries Limited Kirloskar Oil Kirloskar Kirloskar Engines Limited Pneumatic RoadRailer

Company LimitedLimited

As at March As at March As at March As at March As at March 31, 2012 31, 2011 31, 2012 31, 2012 31, 2012

I. EQUITY AND LIABILITIES

1. Shareholders’ funds

(a) Share capital 33,539,900 20,001,300 291,259,500 128,443,380 1,000,000

(b) Reserves and surplus (9,421,580) (8,953,115) 10,035,244,828 2,168,977,649 (65,843)

24,118,320 11,048,185 10,326,504,328 2,297,421,029 934,157

2. Non–current liabilities

(a) Long–term borrowings – – 781,972,047 62,548,750 –

(b) Deferred tax liabilities (net) – – 380,202,921 4,274,365 –

(c) Other long–term liabilities 245,006 245,006 460,181,709 13,174,461 –

(d) Long–term provisions – – 311,541,462 26,500,705 –

245,006 245,006 1,933,898,139 106,498,281 –

3. Current liabilities

(a) Short–term borrowings – 7,061,566 83,943,593 – –

(b) Trade payables 300,943 800,943 2,489,414,568 1,077,945,194 –

(c) Other current liabilities – 14,038 1,791,271,068 862,108,860 34,693

(d) Short–term provisions – – 1,051,977,310 488,123,129 –

300,943 7,876,547 5,416,606,540 2,428,177,183 34,693

TOTAL 24,664,269 19,169,738 17,677,009,006 4,832,096,493 968,850

II. ASSETS

1. Non–current assets

(a) Fixed assets

Tangible assets 23,429,624 18,429,624 5,698,174,387 780,576,593 –

Intangible assets – – 59,930,665 125,275,639 –

Capital work–in–progress – – 89,100,718 20,424,092 –

Intangible assets under development – – 66,093,992 – –

23,429,624 18,429,624 5,913,299,762 926,276,324 –

(b) Non–current investments – – 100,000,200 30,713,098 –

(c) Deferred Tax Assets (Net) – – – – –

(d) Long–term loans and advances – – 724,717,601 45,170,926 –

(e) Other non–current assets 120,150 120,150 102,874,088 28,465,895 –

23,549,774 18,549,774 6,840,891,651 1,030,626,243 –

2. Current assets

(a) Current investments – – 5,174,293,728 1,000,000,000 –

(b) Inventories – – 1,322,211,173 821,739,537 –

(c) Trade receivables – – 2,989,445,017 1,350,411,642 –

(d) Cash and bank balances 576,627 82,096 273,794,707 251,346,348 968,850

(e) Short term loans and advances 500,000 500,000 565,139,197 84,054,519 –

(f) Other current assets 37,868 37,868 511,233,533 293,918,204 –

1,114,495 619,964 10,836,117,355 3,801,470,250 968,850

TOTAL 24,664,269 19,169,738 17,677,009,006 4,832,096,493 968,850

Turnover – – 23,621,594,669 6,801,749,978 –

Profit before tax (468,465) (6,109,868) 2,809,879,969 884,716,512 (64,843)

Tax expense – – 891,852,361 265,571,187 –

Profit / (Loss) for the period (468,465) (6,109,868) 1,918,027,608 619,145,325 (64,843)

Interim Dividend – – – – –

Proposed Dividend – – 582,519,000 154,132,056 –

contd.



41

Note 1 : Details of Investments

Non Current Investments

Government and Trust Securities – Quoted

201.988 units of 10/- each in UTI Balanced fund (Growth) – – – 8,063 –

4,811.812 (4,524.825) units of 10/- each in UTI Balanced Fund – – – 83,447 –

(Dividend Plan –Reinv.)

3300 Master Shares of 10/- each – – – 8,244 –

Other Quoted Investments

46,990 Shares of 2/- each in Housing Development Finance Corporation Ltd. – – – 117,475 –

10,059 Shares of 10/- each in ICICI Bank Ltd. – – – 206,101 –

2,000,000 Shares of 5/- each in Kirloskar Ferrous Industries Ltd. – – – 20,000,000 –

2,500 Shares of 2/- each (500 Equity Shares of 10/- each) in HDFC Bank Ltd. – – – 5,000 –

1,400 Equity shares of 10/- each in Punjab National Bank – – – 43,400 –

100,000 Shares of 10/- each in The Mysore Kirloskar Ltd. – – – 1 –

(At cost i.e. 2,400,000/- less provision for diminution in value of 2,399,999/-)

375,000 Shares of 10/- each in Kirloskar Investment and Finance Ltd. – – – 1,136,250 –

(At cost i.e. 5,000,000/- less provision for diminution in value

of 3,863,750/-)

Fully paid Equity Shares : Trade, Unquoted

1,272 Shares of Ken. Sh. 1,000/- each in Kirloskar Kenya Ltd. – – – 833,984 –

56,250 Shares of Singapore $ 1 each in Kirsons Trading Pte. Ltd. – a Foreign – – – 1,120,932 –

Body Corporate

1 Share of 100/- fully paid in The Nasik Merchants' Co–operative Bank Ltd. – – – 100 –

62,500 Shares of 20/- each fully paid in The Cosmos Co–operative Bank Ltd. – – – 1,250,000 –

2 Shares of 100/- each in Kirloskar Proprietory Ltd. – – 100 100 –

100,000 Equity Shares of 10/- each in Kirloskar RoadRailer Limited – – – – 1,000,000 –

Subsidiary Company

490,000 Equity Shares of 10/- each fully paid in Kirloskar Chillers Pvt. Ltd.– – – – 4,900,000 –

Associate Company

Fully paid Preference Shares : Trade, Unquoted

1 Preference Share of 100/- each in Kirloskar Proprietory Ltd. – – 100 – –

In Debentures and Bonds : Quoted

12.5% Secured Redeemable Partly Convertible Debentures – – – 1 –

of The Mysore Kirloskar Ltd.

(At cost i.e. 1,100,000/- less provision for diminution in value of 1,099,999/-)

Unquoted Debt Instrument

7,385,411 (2,339,200) HDFC Group Unit Linked Plan – – 100,000,000 – –

Total Non-current Investments – – 100,000,200 30,713,098 –

Particulars Nashik Silk Industries Limited Kirloskar Oil Kirloskar Kirloskar

Engines Limited Pneumatic RoadRailer

Company Limited

Limited

As at March As at March As at March As at March As at March

31, 2012 31, 2011 31, 2012 31, 2012 31, 2012

[in `]

contd.

42



Company Limited

Limited


31, 2012 31, 2011 31, 2012 31, 2012 31, 2012

Current Investments

In Mutual Fund Units –

Current Portion of Long Term Investments

Dividend Scheme – Fixed Maturity Plan

5,000,000 (–) SBI Debt Fund Series – 367 Days – 12 Dividend – – 50,000,000 – –

10,000,000 (10,000,000) Birla Sun Life Interval Income Fund – Instl– – – 100,000,000 – –

– Qtrly –S1– Div Payout

10,000,000 (–) Birla Sun Life Short Term FMP Series 25–Div–Payout – – 100,000,000 – –

10,000,000 (–) Birla Sun Life Short Term FMP Series 29–Div–Payout – – 100,000,000 – –

10,000,000 (–) Birla Sun Life Quarterly Interval Series – 4 – Div Payout – – 100,000,000 – –

10,000,000 (–) DSP Black Rock FMP – 3M Series 33–Div Payout – – 100,000,000 – –



10,000,000 (–) IDFC Quarterly FMP Series – 72 – Div Payout – – 100,000,000 – –

10,000,000 (–) SBI Debt Fund Series – 90 Days – 55 Dividend – – 100,000,000 – –

9,997,001 (–) UTI Fixed Income Interval Series – I – – 100,000,000 – –

9,996,901 (–) UTI Fixed Income Interval Series – III – – 100,000,000 – –

10,000,000 (–) UTI Quarterly FMP Sreries – 1 – – 100,000,000 – –

5,192,992 (–) Birla Sunlife Cash Plus INSTL Premium–Daily Div.Reinvestment – – 520,311,834 – –

40,813,645 (–) HDFC Liquid Fund Premimum Plan – Daily Div. Reinvestment – – 500,367,129 – –

5,500,975 (1,000,423) ICICI Prudential Liquid Super Inst.Plan – Div– Daily – – 550,221,795 – –

30,152,171 (–) IDFC Ultra Short Term Fund – – 301,898,617 – –

300,060 (–) IDFC Cash Fund Super Inst Plan C – – 300,135,031 – –

55,983,445 (–) Reliance Liquid Fund – Daily Dividend – – 600,140,364 – –

498,827 (39,886,975) SBI Premier Liquid Fund – Super Inst. – Daily Dividend – – 500,448,015 – –

100,275 (–)TATA Liquidity Management Fund – Daily Dividend Reinvestment – – 100,536,734 – –

490,692 (–) UTI Liquid Fund – Cash Plan – Daily Dividend – – 500,234,210 – –

– – 5,174,293,728 – –

Quoted

7,000,000.00 (–) units of 10/- each of DSP BlackRock FMP Series 36 – – – – 70,000,000 –

3M Dividend

3,000,000.00 (–) units of 10/- each of DSP BlackRock FMP Series 39 – – – – 30,000,000 –

12–M Dividend

5,000,000.00 (–) units of 10/- each of IDFC Fixed Maturity Yearly – – – – 50,000,000 –

Series 61 Dividend

7,000,000.00 (–) units of 10/- each of IDFC FMP Yearly Series 52 Dividend – – – 70,000,000 –

2,000,000.00 (–) units of 10/- each of Kotak FMP –Series 45 Dividend – – – 20,000,000 –

3,000,000.00 (–) units of 10/- each of Kotak FMP –Series 75 Dividend – – – 30,000,000 –

2,000,000.00 (–) units of 10/- each of Reliance Fixed Horizon Fund– – – – 20,000,000 –

– XX Series 15 Div. Plan

5,000,000.00 (–) units of 10/- each of Reliance Fixed Horizon Fund – – – – 50,000,000 –

XX Series 13 Div. Plan

5,000,000.00 (–) units of 10/- each of Reliance Fixed Horizon Fund – – – – 50,000,000 –

XXI Series 6 Div. Plan

2,000,000 (–) units of 10/- each of Religare FMP Series X Plan–E (371 Days) – – – 20,000,000 –

3,000,000.00 (–) units of 10/- each of Sundaram Interval Fund – Qtrly. – – – 30,000,000 –

Pl. Fixed Term Plan–E Div.

5,000,000.00 (–) units of 10/- each of Sundaram Fixed Term Plan BK– – – – 50,000,000 –

366 Days Div.

4,500,000.00 (–) units of 10/- each of Tata Fixed Maturity Plan Series– – – – 45,000,000 –

39 Scheme A Div.

5,000,000.00 (–) units of 10/- each of Birla SunLife FMP Series–EG Div. – – – 50,000,000 –

2,000,000.00 (–) units of 10/- each of SBI Debt Fund Series 13 Months Div. – – – 20,000,000 –

[in `]

contd.



43

5,000,000.00 (–) units of each of SBI Debt Fund Series 370 Days Div. – – – 50,000,000 –

5,000,000.00 (–) units of 10/- each of SBI Debt Fund Series 58–90 Days Div. – – – 50,000,000 –

7,000,000.00 (–) units of 10/- each of UTI Fixed Term Income Fund– – – – 70,000,000 –

Series IX–V (367 Days) Div.

3,000,000.00 (–) units of 10/- each of UTI Fixed Term Income Fund Series IX– – – – 30,000,000 –

–VI (367 Days) Div.

7,000,000.00 (–) units of 10/- each of ICICI Prudential FMP Series 57– – – – 70,000,000 –

1 Year Plan A Div.

5,000,000.00 (–) units of 10/- each of HDFC FMP 92 D March 12– Series XIX – – – 50,000,000 –

5,000,000.00 (–) units of 10/- each of HDFC FMP 370 D March 12– Series XIX – – – 50,000,000 –

2,500,000.00 (–) units of 10/- each of L and T FMP VI March (371 Days) Div. – – – 25,000,000 –

– – – 1,000,000,000 –

Total Current Investments – – 5,174,293,728 1,000,000,000 –

10/-



Company Limited

Limited


31, 2012 31, 2011 31, 2012 31, 2012 31, 2012

[in `]



CONSOLIDATEDFINANCIAL

STATEMENTS

45

AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF


We have audited the attached consolidated balance sheet of Kirloskar Brothers Investments Limited (KBIL) Group, as at

31st March 2012, the consolidated profit and loss account and the consolidated cash flow statement for the year ended on

that date, annexed thereto. These financial statements are the responsibility of the Company’s Management and have been

prepared by the Management on the basis of separate financial statements and other financial information regarding

components. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the generally accepted auditing standards in India. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by the

Management; as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

We report that the consolidated financial statements have been prepared by the Management in accordance with the

requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, Accounting Standard (AS) 23,

Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27, Financial

Reporting of Interests in Joint Ventures, prescribed by Companies (Accounting Standards) Rules, 2006.

In view of the pending finalisation of accounts of Kirloskar Chillers Private Limited; an associate company of Kirloskar

Pneumatic Company Limited (KPCL), as at 31st March 2012, the same has not been considered in the consolidated

accounts of KPCL and consequently in the consolidated accounts of KBIL Group.

Based on our audit and on consideration of report of other auditors on separate financial statements and on the other

financial information of the components, and to the best of our information and according to explanations given to us, we are

of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting

principles generally accepted in India:

a) in the case of the consolidated balance sheet, of the state of affairs of KBIL Group as at 31st March, 2012;

b) in the case of consolidated profit and loss account, of the profit for the year ended on that date; and

c) in the case of the consolidated cash flow statement, of the cash flows for the year ended on that date.



Firm’s Registration No.: 101118W

ABHIJEET BHAGWAT

Partner

Membership No.: 136835

Pune : 24 May 2012

46



CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2012

[in `]

Particulars Figures as at the Figures as at theNote end of current reporting end of previous reportingNo. year ended on year ended on

March 31, 2012 March 31, 2011I. EQUITY AND LIABILITIES 1 Shareholders’ funds

(a) Share capital A - 1 52,887,180 52,887,180 (b) Reserves and surplus A - 2 7,131,272,933 1,267,113,567 (c) Money received against share warrants – –

7,184,160,113 1,320,000,747 2 Share application money pending allotment – –3 Minority Interest

Capital 198,914,322 – Reserves and surplus 5,806,278,559 –

6,005,192,881 – 4 Non-current liabilities

(a) Long-term borrowings A - 3 844,520,797 – (b) Deferred tax liabilities (Net) A - 4 384,477,286 – (c) Other long term liabilities A - 5 473,476,176 418,331 (d) Long-term provisions A - 6 338,042,167 –

2,040,516,426 418,331 5 Current liabilities

(a) Short-term borrowings A - 7 83,943,593 –(b) Trade payables 3,566,414,710 3,261,742 (c) Other current liabilities A - 8 2,657,107,992 –(d) Short-term provisions A - 9 1,176,120,811 15,665,038

7,483,587,106 18,926,780 TOTAL 22,713,456,526 1,339,345,858

II. ASSETS 1 Non-current assets

(a) Fixed assets(i) Tangible assets A - 10 6,502,157,697 19,366,342 (ii) Intangible assets A - 11 185,206,302 –(iii) Capital work-in-progress 109,524,811 –(iv) Intangible assets under development 66,093,992 –

(b) Non-current investments 199,669,828 665,672,789 (c) Deferred tax assets (Net) A - 4 – 274,155 (d) Long-term loans and advances A - 12 770,399,113 –(e) Other non-current assets A - 13 131,460,132 120,150

7,964,511,875 685,433,436 2 Current assets

(a) Current investments 6,174,293,728 –(b) Inventories A - 14 2,143,950,709 –(c) Trade receivables A - 15 4,338,362,849 –(d) Cash and bank balances A - 16 637,263,446 651,510,360 (e) Short-term loans and advances A - 17 649,708,767 502,000 (f) Other current assets A - 18 805,365,152 1,900,062

14,748,944,651 653,912,422 TOTAL 22,713,456,526 1,339,345,858

The Notes referred in Part A - Notes to Accounts, Part B - Significant Accounting Policies and Part C - Other Notes form an integral part of the Balance Sheet




Pune : 24 May 2012

47

CONSOLIDATED PROFIT & LOSS STATEMENT FOR THE YEAR ENDED MARCH 31, 2012

[in `]

Particulars Figures for Figures forNote current reporting previous reportingNo. year ended on year ended on

March 31, 2012 March 31, 2011

I. Revenue from operations A - 19 31,109,320,533 366,300,896

II. Other income A - 20 498,180,635 3,746,617

III. Total revenue (I + II) 31,607,501,168 370,047,513

IV. Expenses : Cost of materials consumed A - 21 16,477,848,413 –Purchases of Stock-in-Trade A - 22 1,046,542,953 –Changes in inventories of finished goods work-in-progress and stock-in-trade A - 23 298,155,945 –Employee benefits expense A - 24 2,465,208,536 5,308,130 Finance costs A - 25 171,555,482 127,028 Depreciation and amortization expense A - 26 1,033,823,144 262,970 Other expenses A - 27 5,725,980,778 9,657,232 Total expenses 27,219,115,251 15,355,360

V. Profit before exceptional and extraordinary items and tax (III – IV) 4,388,385,917 354,692,153

VI. Exceptional items A - 28 477,123,476 –VII. Profit before extraordinary items and tax (V + VI) 4,865,509,393 354,692,153 VIII. Extraordinary Items – –IX. Profit before tax (VII – VIII) 4,865,509,393 354,692,153 X. Tax expense :

(1) Current tax 1,347,358,725 9,716,000 (2) Deferred tax 45,753,978 (274,155)

1,393,112,703 9,441,845 XI. Profit / (Loss) for the period from continuing

operations (IX – X) 3,472,396,690 345,250,308 XII. Profit / (Loss) from discontinuing operations – –XIII. Tax expense of discontinuing operations – –

XIV. Profit / (Loss) from discontinuing operations (after tax) (XII – XIII) – –XV. Profit / (Loss) for the period (XI + XIV) 3,472,396,690 345,250,308

Less : Pre Acquisition Profit 523,624,364 –2,948,772,326 345,250,308

XVI. Less : Minority Interest 560,444,634 –XVII. Profit / (Loss) for the period (XV – XVI) 2,388,327,692 345,250,308 XVIII. Earnings per equity share having nominal value of

` 10/- per share

(1) Basic C - 3 451.59 65.28 (2) Diluted C - 3 451.59 65.28

The Notes referred in Part A - Notes to Accounts, Part B - Significant Accounting Policies and Part C -Other Notes form an integral part of the Profit & Loss Statement




Pune : 24 May 2012

48



CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012

[in `]




March 31, 2012 March 31, 2011

A Cash flows from Operating Activities

Net Profit before Taxes and Extraordinary Items 4,865,509,393 354,692,153

Adjustments for

Depreciation / Amortization 1,032,473,652 262,970

Leasehold land written off 1,349,492 –

(Profit) / Loss on sale of Fixed Assets 12,179,928 –

Write down of obsolete and non moving components 30,365,384 –

Bad debts and irrecoverable balances written off, Net 13,657,939 –

Interest Income (88,433,295) –

Dividend Income (310,122,592) –

Interest paid on Secured / Unsecured Loans 171,555,482 –

Profit on sale of Undertaking (477,123,476) –

Valuation gain / (loss) in respect of Derivative Instruments (21,516,655) –

Surplus on sale of Assets (12,144,639) –

Profit on sale of Investment (Net) (1,144,574,468) 3

Profit on sale of mutual fund investment (Net) (219,430) –

Sundry Credit Balances appropriated (12,022,027) –

Provision written back (173,537,209) (3,746,617)

Investment written off 500,000 –

Operating Profit Before Working capital changes 3,887,897,479 351,208,509

Adjustments for

(Increase) / decrease in Inventories (171,332,027) –

(Increase) / decrease in Trade and Other Receivables 1,674,654,133 (1,435,814)

(Increase) / decrease in Long Term Loans and Advances (65,400) –

(Increase) / decrease in Short Term Loans and Advances (217,048) –

(Increase) / decrease in Other Current Assets 179,951,778 –

Increase / (decrease) in Short Term Provisions (150,741,852) –

Increase / (decrease) in Other Current Liabilities (127,780) –

Increase / (decrease) in Trade Payables 108,611,123 1,822,340

Income Tax (Paid) / Refunded (1,250,273,593) (9,639,321)

Net Cash from Operating Activities (A) 4,278,356,813 341,955,714

49

B Cash flows from Investing Activities

Capital Expenditure - Tangible Assets (156,685,775) –

Capital Expenditure - Intangible Assets (21,350,163) –

Sale of Undertaking 906,200,000 –

Sale of Fixed Assets 17,494,182 –

Purchase of Fixed Assets (931,051,838) (1,199,688)

(Purchase) / Sale of Investments (Net) (3,405,678,472) 1,003,206

Interest received 88,433,295 –

Dividend received 310,122,592 –

Net Cash from Investment Activities (B) (3,192,516,179) (196,482)

C Cash Flows from Financing Activities

Increase / (Decrease) in Secured Loans (63,470,000) –

Interest on Secured / Unsecured Loans (12,188,554) –

Interest paid (47,347,681) –

Proceeds from borrowing 83,943,593 –

Repayment of borrowing (1,075,458,318) –

Dividend & Dividend Tax paid (491,199,661) –

Sale of Fractional Shares 2,964,001 –

Fractional entitlements (2,087,813) –

Net Cash used in Financing Activities (C) (1,604,844,433) –

Net Increase in Cash and Cash Equivalents (A) + (B) + (C) (519,003,801) 341,759,232

Cash and Cash Equivalents at beginning of period(Refer note A-16 (a)) 651,510,360 309,751,128

Add : Cash and Cash Equivalents from acquisitionof subsidiaries 490,083,350 –

Cash and Cash Equivalents at end of period(Refer note A-16 (a)) 622,589,909 651,510,360

[in `]




March 31, 2012 March 31, 2011

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012 (CONTD.)




Pune : 24 May 2012

50



PART A : CONSOLIDATED NOTES TO ACCOUNTS

[in `]




March 31, 2012 March 31, 2011

NOTE A - 1 : SHARE CAPITAL

Authorised

14,000,000 (10,000,000) Equity Shares of

` 10/- each (` 10/- each) 140,000,000 100,000,000

(Increased due to Amalgamation of

Pooja Credits Private Limited with the Company)

TOTAL 140,000,000 100,000,000

Issued, Subscribed And Paid-up

5,288,718 (5,288,718) Equity Shares of

` 10/- each (` 10/- each) 52,887,180 52,887,180

TOTAL 52,887,180 52,887,180

(a) Reconciliation of Share Capital

Particulars Figures as at the end of Figures as at the end of



No. of Shares ` No. of Shares `


beginning of the year 5,288,718 52,887,180 5,288,218 52,882,180

Add / (Less) : Shares issued – – 500 5,000


end of the year 5,288,718 52,887,180 5,288,718 52,887,180

(b) The Company has only one class of equity shares, having par value of 10/- per share. Each holder of equity share is

entitled for one vote per share and has a right to receive dividend as recommended by the Board of Directors subject to

the necessary approval from the shareholders. In the event of liquidation of the Company, the holders of equity shares

will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution

will be in proportion to the number of equity shares held by the equity shareholders.

(c) For the year ended March 31, 2012, the Board of Directors have proposed dividend of 4/- per share (March 31, 2011

2.50 per share).

51

(d) Details of shareholders holding more than 5% shares

Name of the shareholder Figures as at the end of Figures as at the end of



No. of Shares % of holding No. of Shares % of holding

Mr. Rahul Chandrakant Kirloskar 1,034,383 19.56 764,932 14.46

Mr. Gautam Achyut Kulkarni 1,035,751 19.58 766,967 14.50

Mr. Atul Chandrakant Kirloskar 1,033,909 19.55 764,589 14.46

Kirloskar Industries Limited – – 551,309 10.42

TOTAL 3,104,043 58.69 2,847,797 53.84

(e) Aggregate number of shares allotted as fully paid up without payment being received in cash persuant to Scheme of

Arrangement between Kirloskar Brothers Limited and Kirloskar Brothers Investments Limited and their respective

shareholders under Section 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956 are 5,288,718

(5,288,718) equity shares of 10/- each (` 10/- each).

[in ]




March 31, 2012 March 31, 2011

NOTE A - 2 : RESERVES AND SURPLUS

(a) Capital Reserves

Opening Balance 97,200,659 97,200,659

Add : Subsidy availed during the year 83,359,602 –

Add : Due to acquisition of subsidiaries 3,880,821,460 –

Less : Due to Amalgamation of subsidiary 100,028,205 –

Closing Balance 3,961,353,516 97,200,659

(b) Revaluation Reserve

Opening balance – –

Add : Due to acquisition of subsidiaries 10,154,527 –

Less : Adjusted during the year 10,154,527 –

Closing balance – –

(c) Reserve Fund

In terms of Section 45-IC of the

Reserve Bank of India Act, 1934

Opening balance 57,758,481 –


Closing balance 319,605,687 57,758,481

`

PART A : CONSOLIDATED NOTES TO ACCOUNTS (CONTD.)

52



(d) General Reserve

Opening Balance 591,979,550 563,105,310

Add : Due to Amalgamation of subsidiary 8,375,434 –

Less : Written off – 5,000


Closing Balance 1,323,081,387 591,979,550

(e) Surplus

Opening Balance 520,174,877 276,928,991

Add : Transfer from Profit and Loss Statement 2,388,327,692 345,250,308

Less : Due to acquisition of subsidiaries (2,472,626) –

Add : Due to Amalgamation of subsidiary 91,652,771 –

Balance available for appropriation 3,002,627,966 622,179,299

Less : Appropriations :

Proposed dividend 371,315,884 13,221,795

Tax on dividend 119,506,130 2,144,906

Transfer to General Reserve 722,726,403 28,879,240

Transfer to Reserve Fund In terms of

Section 45-IC of the Reserve Bank of India Act, 1934 261,847,206 57,758,481

Sub total 1,475,395,623 102,004,422

Closing Balance 1,527,232,343 520,174,877

TOTAL 7,131,272,933 1,267,113,567

[in `]




March 31, 2012 March 31, 2011

NOTE A - 3 : LONG TERM BORROWINGS

Secured

Term loans from banks

i) Foreign currency term loan from BNP PARIBAS 781,972,047 –

ii) Bank of India, UK 62,548,750 –

TOTAL 844,520,797 –


53


[in `]




March 31, 2012 March 31, 2011

NOTE A - 4 : DEFERRED TAX ASSETS / (LIABILITIES) (NET)

(a) Deferred Tax Assets

i) On employees voluntary retirement schemes 2,125,866 –

ii) On provision for doubtful debts / advances 45,576,684 –

iii) Disallowances u/s 43 b of Income Tax Act 119,289,683 –

iv) Deamalgamation Expenses 11,201,232 –

v) Difference in Exchange–MTM losses on exports Options 30,104,348 –

vi) On depreciation / amortization of fixed assets – 19,132

vii) Others 975,256 255,023

209,273,069 274,155

(b) Deferred Tax Liabilities

i) On depreciation / amortization of fixed assets (593,750,355) –

ii) Other timing differences – –

TOTAL (593,750,355) –

NET (384,477,286) 274,155

NOTE A - 5 : OTHER LONG TERM LIABILITIES

(a) Others

i) Deposits from customers 150,643,608 –

ii) Advance from customers 317,175,000 –

iii) Other Liabilities 5,657,568 418,331

TOTAL 473,476,176 418,331

NOTE A - 6 : LONG TERM PROVISIONS

(a) Provision for employee benefits

i) Provision for leave encashment 174,384,754 –

ii) Provision for Pension and other Retirement 57,630,804 –

iii) Provision for Employee benefits 26,500,705 –

258,516,263 –

(b) Other provisions

i) Provision for warranty 74,058,848 –

ii) MTM liabilities on derivative 5,467,056 –

TOTAL 338,042,167 –

54



[in ]




March 31, 2012 March 31, 2011

NOTE A - 7 : SHORT TERM BORROWINGS

Secured

(a) Loans repayable on demand from banks

Packing credit foreign currency loan 83,943,593 –

Kirloskar Oil Engines Limited’s fund and non fund

based working capital facilities of ` 310/- Crores are

secured by first charge by way of hypothecation on

the whole of the current assets of the Company both

present and future for ` 310/- Crores and also the

second charge on the whole of the movable Plant

and machinery of the Company together with all its

accessories, spares, tools and implements both

present and future for ` 60/- Crores, in favour of the

consortium of banks (SBI Consortium) comprising of

State Bank of India, Pune (Lead Bank), Bank of

Maharashtra, ICICI Bank Limited, HDFC Bank

Limited and The Hongkong and Shanghai Banking

Corporation Limited (HSBC).

Packing credit foreign currency loan (LIBOR based) is

availed from HSBC at the rate of Interest of 2.94% p.a.

TOTAL 83,943,593 –

`


NOTE A - 8 : OTHER CURRENT LIABILITIES

(a) Current maturities of long-term debts 886,266,102 –

(b) Interest accrued and not due on borrowings 4,682,545 –

(c) Unpaid dividends 15,308,659 –

(d) Unpaid Fractional entitlements 876,188 –

(e) Advances from customers 333,369,727 –

(f) Payables for capital purchases 85,326,050 –

(g) Other payables

i) Statutory dues including provident fund and TDS 51,846,101 –

ii) Employee benefits payable 235,797,551 –

iii) Other payables 559,790,506 –

iv) Other liabilities 483,844,563 –

TOTAL 2,657,107,992 –

55

[in `]




March 31, 2012 March 31, 2011

NOTE A - 9 : SHORT TERM PROVISIONS

(a) Provision for employee benefits

i) Provision for leave encashment 72,088,355 123,571

ii) Provision for pension and other retirement benefits 46,982,390 105,995

119,070,745 229,566

(b) Others

i) MTM liabilities on derivative 87,318,730 –

ii) Provision for warranty 183,149,194 –

iii) Tax provision (Net of tax paid in advance) 295,760,128 68,771

iv) Proposed dividend 371,315,884 13,221,795

v) Tax on proposed dividend 119,506,130 2,144,906

TOTAL 1,176,120,811 15,665,038


56



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[in

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PA

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57

NOTE A 1 : INTANGIBLE ASSETS

Computer Drawings Technical Development Total

Software & Designs Knowhow expenditure

Gross Block

At 01.04.2010 – – – – –

Additions

Additions during the year – – – – –

Total additions – – – – –

Deductions

Deductions during the year – – – – –

At 31.03.2011 – – – – –

Additions

Addition on account of acquisition of subsidiaries 113,043,368 158,104,343 148,497,955 14,300,000 433,945,666

Additions during the year 16,622,788 4,191,331 24,100,276 – 44,914,395

Hive off – Bearing Division (2,843,395) (46,881,869) – – (49,725,264)

Total additions 126,822,761 115,413,805 172,598,231 14,300,000 429,134,797

Deductions – – – – –

At 31.03.2012 126,822,761 115,413,805 172,598,231 14,300,000 429,134,797

Depreciation / Amortization

At 01.04.2010 – – – – –

For the year – – – – –

At 31.03.2011 – – – – –

At 01.04.2011 – – – – –

On account of acquisition of subsidiaries 69,169,882 141,498,236 16,571,550 10,468,398 237,708,066

For the year 24,077,883 1,343,340 9,036,209 3,767,490 38,224,922

Sub total 93,247,765 142,841,576 25,607,759 14,235,888 275,932,988

Less : Hive off –Bearing Division 441,870 31,562,623 – – 32,004,493

At 31.03.2012 92,805,895 111,278,953 25,607,759 14,235,888 243,928,495

Net Block

As at 31.03.2011 – – – – –

As at 31.03.2012 34,016,866 4,134,852 146,990,472 64,112 185,206,302

- 1

[in `]


58



[in `]




March 31, 2012 March 31, 2011

NOTE A - 12 : LONG TERM LOANS AND ADVANCES

(a) Capital advances

Unsecured, considered good 55,578,584 –

(b) Security deposits


(c) Loans and advances to suppliers


Doubtful 1,307,584 –

Less : Provision 1,307,584 –

– –

(d) Loans to employees


(e) Other loans and advances

i) Advance to Employees Group Superannuation Trust 41,000 –

ii) Tax paid in advance (net of provision for tax) 404,382,583 –

TOTAL 770,399,113 –

NOTE A - 13 : OTHER NON CURRENT ASSETS

(a) Long term trade receivables

i) Doubtful 168,939,570 –

Less: Provision for doubtful receivables 140,473,675 –

28,465,895 –

(b) Others

i) Subsidy receivable for setting up Kagal plant 27,458,959 –

ii) Derivative asset 51,442,556 –

iii) Other bank balances

(Deposits with maturity of more than 12 months) 115,000 –

iv) Deposits with Post, Railways and Others 120,150 120,150

v) Inventories 23,857,572 –

TOTAL 131,460,132 120,150


59

[in `]




March 31, 2012 March 31, 2011

NOTE A - 14 : INVENTORIES

(a) Raw Materials 1,425,415,635 –

– Raw Materials in transit 15,285,672 –

(b) Work-in-progress 284,828,103 –

(c) Finished goods 260,533,968 –

(d) Stores and spares 157,887,331 –

TOTAL 2,143,950,709 –

NOTE A - 15 : TRADE RECEIVABLES

(i) Trade receivables outstanding for a period less

than six months Unsecured, considered good 326,679,161 –

(ii) Trade receivables outstanding for a period

exceeding six months Secured, considered good 438,179,699 –

Unsecured, considered good 3,573,503,989 –

TOTAL 4,338,362,849 –

NOTE A - 16 : CASH AND BANK BALANCES

(a) Cash and Cash Equivalents

i) Cash on hand 1,771,105 19,662

ii) Balance with Bank 604,637,677 651,490,698

iii) Earmarked balances with banks

Unpaid dividend accounts 15,304,939 –

Unpaid fractional entitlement account 876,188 –

622,589,909 651,510,360

(b) Other bank balances

Deposits with original maturity of more than

3 months but less than 12 months 14,673,537 –

TOTAL 637,263,446 651,510,360


60



[in `]




March 31, 2012 March 31, 2011

NOTE A - 17 : SHORT TERM LOANS AND ADVANCES

(a) Others

i) Loans and advance to suppliers


ii) Loans and advance to employees

Unsecured, considered good 18,155,385 2,000

iii) Other loans and advances

Unsecured, considered good 120,256,371 500,000

iv) Balance with collectorate of central excise and custom 60,991,314 –

v) Sales tax / VAT / service tax receivable (Net) 287,207,723 –

vi) Provision for Gratuity 29,344 –

TOTAL 649,708,767 502,000

NOTE A - 18 : OTHER CURRENT ASSETS

i) Export incentive receivable 57,031,915 –

ii) Accrued Interest on Fixed deposits with bank 166,177 1,017,966

iii) Sundry Deposits 2,382,740 –

iv) Balances with Central Excise 8,730,012 –

v) Taxes paid in Advance (Net of provision for tax) 282,843,320 869,074

vi) Income receivable 9,524,834 –

vii) Derivative asset 35,096,847 –

viii) Subsidy receivable for setting up Kagal plant 406,695,770 –

ix) Others 2,893,537 13,022

TOTAL 805,365,152 1,900,062


61

[in `]




March 31, 2012 March 31, 2011

NOTE A - 19

(a) Revenue from operations

Sale of products (gross) 30,001,622,079 –

Less : Excise duty 2,152,981,358 –

27,848,640,721 –

Works Contract Sale 380,523,696 –

Sales of services 1,188,615,074 –

(b) Interest Income

On Fixed deposits with bank 37,926,858 34,676,620

(c) Profit on sale of non current Investments 1,144,574,468 –

(d) Dividend Income from Long term investments –

From other companies 4,268,667 331,624,276

(e) Other operating revenue

i) Sale of scrap 141,916,206 –

ii) Cash discount received 19,603,106 –

iii) Commission received 67,652,358 –

iv) Export incentives 71,707,360 –

v) Refund of sales tax, octroi etc. 8,350,144 –

vi) Sundry credit balances appropriated 7,920,215 –

vii) Provisions no longer required written back 168,476,127 –

viii) Miscellaneous receipts 19,145,533 –

TOTAL 31,109,320,533 366,300,896

NOTE A - 20 : OTHER INCOME

(a) Interest Income

i) On income tax refund 46,150,221 –

ii) On others 42,283,074 –

(b) Dividend 310,122,592 –

(c) Profit on Sale of Mutual Fund investments (Net) 219,430 –

(d) Surplus on sale of assets 12,144,639 –

(e) Bad debts / Liquidated damages recovered 4,520,197 –

(f) Insurance Claim Received 203,195 –

(g) Refund of Income Tax 8,131,876 –

(h) Sundry Credit balances appropriated 4,101,812 –

(i) Others 65,623,692 –

(j) Other non operating income - Provision written back 4,679,907 3,746,617

TOTAL 498,180,635 3,746,617


62



[in `]




March 31, 2012 March 31, 2011

NOTE A - 21 : COST OF MATERIAL CONSUMED

(a) Opening stocks 1,229,960,449 –

Less : Value of obsolete and non-moving material written-down 30,365,384 –

(net of realisable value)

Add : Purchases 16,339,942,325 –

17,539,537,390 –

Less : Closing stock 1,448,871,817 –

16,090,665,573 –

(b) Freight, octroi and entry tax 356,817,456 –

(c) Write-down of obsolete and non-moving material 30,365,384 –

TOTAL 16,477,848,413 –

NOTE A - 22 : PURCHASES OF STOCK-IN-TRADE

Finished goods purchases for resale 1,046,542,953 –

TOTAL 1,046,542,953 –

NOTE A - 23 : CHANGES IN INVENTORIES OF FINISHED GOODS, WORK-IN-PROGRESS AND STOCK-IN-TRADE

Opening Stock

Work-in-progress 651,120,894 –

Finished goods 181,286,977 –

832,407,871 –

Closing Stock

Work-In-Progress 285,229,494 –

Finished goods 260,533,968 –

545,763,462 –

Increase / (decrease) in excise duty of finished goods 11,511,536 –

TOTAL 298,155,945 –


63

[in `]




March 31, 2012 March 31, 2011

NOTE A - 24 : EMPLOYEE BENEFITS EXPENSE

Salaries, wages and bonus 1,956,504,562 4,843,901

Incentives 26,784,980 –

Contribution to provident fund and E.S.I. 202,470,708 448,143

Welfare expenses 274,329,824 16,086

Provident and other funds’ expenses 5,118,462 –

TOTAL 2,465,208,536 5,308,130

NOTE A - 25 : FINANCE COST

Interest expense 51,672,417 127,028

Other borrowing costs 5,090,627 –

Applicable net gain / loss on foreign currency

transactions and translation 114,792,438 –

TOTAL 171,555,482 127,028

NOTE A - 26 : DEPRECIATION AND AMORTIZATION

(a) Depreciation

Tangible assets 994,248,730 262,970

Intangible assets 38,224,922 –

(b) Amount written off against leasehold land 1,349,492 –

TOTAL 1,033,823,144 262,970


64



[in `]




March 31, 2012 March 31, 2011

NOTE A - 27 : OTHER EXPENSES

(a) Manufacturing Expenses

Stores consumed 897,371,912 –

Power and fuel 348,899,683 –

Machinery spares 93,034,589 –

Repairs to machinery 71,256,060 –

Job work charges 242,620,587 –

Labour charges 102,200,305 –

Cost of services 832,255,763 –

Other manufacturing expenses 277,760,116 –

(b) Selling Expenses

Commission 238,995,150 –

Freight and forwarding 423,243,166 –

Excise Duty, Net 4,632,274 –

Sales Tax 2,684,213 –

Sales warranty claims 294,491,536 –

Royalty, technical and license fees etc. 108,640,663 105,000

Advertisement and publicity 92,961,453 –

Other selling expenses 37,074,366 –

(c) Administration Expenses

Rent 271,809,460 302,174

Rates and taxes 9,135,243 47,309

Insurance 12,608,319 –

Repairs to building 103,480,461 –

Other repairs and maintenance 233,681,198 –

Travelling and conveyance 228,559,097 233,476

Vehicle expenses 17,338,660 –

Communication expenses 52,919,414 81,337

Printing and publication 29,983,446 1,495,902

Legal and professional fees 161,796,120 6,423,118

Auditor’s remuneration 5,879,217 183,098

Donations 42,843,323 –

Directors Fees 6,377,374 220,000

Director’s Commission 400,000 440,000

Directors Remuneration 24,410,323 –

Other / Miscellaneous expenses 285,925,573 125,818

Bank charges 23,629,867 –

Investments written off 500,000 –

Loss on assets sold, demolished, discarded and scrapped 12,179,928 –

Bad debts and irrecoverable balances written off 13,657,939 –

Liquidated Damages 128,255,129 –

Expenses capitalised (7,511,149) –

TOTAL 5,725,980,778 9,657,232


65

[in `]




March 31, 2012 March 31, 2011

NOTE A - 28 : EXCEPTIONAL ITEMS

Profit on sale of Bearings business 477,123,476 –

TOTAL 477,123,476 –


PART B: CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES

NOTE B - 1 : PRINCIPLES OF CONSOLIDATION

Principle of consolidated financial statements relate to Kirloskar Brothers Investments Limited (KBIL) and its majority

owned subsidiary companies, consolidated on a line by line basis by adding together the book value of like items of

assets, liabilities, income and expenses after fully eliminating intra–group transactions and the unrealised profit /

losses on intra-group transactions and are presented to the extent possible in the manner as the Company’s

independent financial statements.

The names of the subsidiary companies, country of incorporation, proportion of ownership interest and reporting

dates considered in the consolidated financial statements are per the table mentioned below:

Name of the Company Country of Proportion of Reporting Date

Incorporation Ownership

Interest of KBIL

Nashik Silk Industries Limited (NSIL) India 100% 31.03.2012

Kirloskar Oil Engines Limited (KOEL) India 52.16% 31.03.2012

Kirloskar Pneumatic Company Limited (KPCL) India 53.61% 31.03.2012

Kirloskar RoadRailer Limited (KRL) India 100% subsidiary of KPCL 31.03.2012

If the amount of the Company’s share of equity in the subsidiary company is higher than the cost of its acquisition it is

treated as capital reserve. If cost of acquisition is more than the share of equity in the subsidiary, it is treated as

goodwill. Goodwill / capital reserve arising due to the investments in subsidiary company is netted out in the

consolidated financial statements.

NOTE B - 2 : OTHER ACCOUNTING POLICIES

They are set out in Part B: Significant Accounting Policies of the parent company – Kirloskar Brothers Investments

Limited

NOTE B - 3 : ACCOUNTING POLICIES OTHER THAN THOSE ADOPTED BY THE PARENT COMPANY FOR THE

CONSOLIDATION OF FINANCIAL STATEMENTS

(A) Kirloskar Oil Engines Limited

(i) Fixed Assets

a. Leasehold land is valued at cost less amount written off.

b. Expenditure on New Projects and Expenditure during Construction :

In case of new projects, expenditure incurred prior to commencement of commercial production,

including interest on borrowings and financing costs of specific loans, is being capitalized to the cost of

assets.

66



c. Capital work-in-progress comprises cost of fixed assets that are not yet installed and not ready for

their intended use at the balance sheet date

d. Intangible assets are recorded at the consideration paid for acquisition. Expenditure incurred on

development phase, where it is reasonably certain that the outcome of development will be

commercially exploited to yield future economic benefits to the Company, is considered as an

intangible asset. Such developmental expenditure is capitalised at cost including a share of allocable

expenses.

e. Own manufactured assets are capitalised at cost including a share of allocable expenses.

(ii) Depreciation and Amortization

a. Freehold land is not depreciated.

b. Leasehold land is amortized over the period of lease.

c. Depreciation on all assets for the year has been provided on straight line method at the rates and in the

manner specified in Schedule XIV to the Companies Act, 1956 from the beginning of the month in

which addition is made. However, if the rate inferred by estimated useful life of the asset is higher than

those of Schedule XIV, then Depreciation is computed with reference to useful life. Accordingly,

Depreciation on following asset classes has been provided over the estimated useful life of respective

assets at the rates being higher than the rates as per Schedule XIV to the Companies Act, 1956.

i. On Computers and peripherals, depreciation rates range from 20.00% p.a. to 33.33% p.a.

ii. On Pattern tooling equipment, depreciation rate is 25.00% p.a.

iii. On Electrical Installation, depreciation rate is 6.67% p.a.

iv. On Furniture and Fixture, depreciation rates range from 10.00% p.a. to 25.00% p.a.

v. On Vehicles and Aircraft, depreciation rates are 20.00% p.a. and 6.67% p.a. respectively.

d. Jigs and Fixtures, Dies and Patterns costing below ` 1 lac and other fixed assets costing below

` 5,000/- are charged to revenue in the year of acquisition.

e. Intangible assets are amortized over their respective individual estimated useful lives on a straight line

basis, commencing from the date the asset is available to the Company for its intended use.

f. Depreciation on additions due to increase in rupee value of fixed assets on account of foreign

exchange fluctuations is being provided at the rates of depreciation over the remaining useful life of

the said asset.

g. Depreciation on assets sold, discarded or demolished during the year is being provided at their

respective rates on prorate basis upto the end of the previous month during which such assets are

sold, discarded or demolished.

(iii) Inventories

a. Stores and spares, raw materials and components are valued at cost or net realisable value

whichever is lower. Cost includes all cost of purchase and incidental expenses incurred in bringing the

inventories to their present location and condition. Cost is ascertained using weighted average

method.

b. Work-in-process including finished components and finished goods are valued at cost or realisable

value whichever is lower. Cost includes direct materials, labour costs and a proportion of

manufacturing overheads based on the normal operating capacity. Finished goods lying in the factory

premises, branches and depots are valued inclusive of excise duty.

c. Materials-in-transit and materials in bonded warehouse is valued at actual cost up to the date of

balance sheet.

d. Unserviceable, damaged and obsolete inventory is valued at cost or net realisable value whichever is

lower.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated

costs of completion and the estimated costs necessary to make the sale.

PART B: CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

67

(iv) Foreign Currency Transactions

a. Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign

currency amount the exchange rate between the reporting currency and the foreign currency at the

date of the transaction.

b. Conversion

Current assets and current liabilities, Secured Loans, being monetary items, designated in foreign

currencies are revalorised at the rate prevailing on the date of Balance Sheet or forward contract rate

or other appropriate rate.

c. Exchange Differences

Exchange differences arising on the settlement and conversion of foreign currency transactions are

recognised as income or as expenses in the year in which they arise, except in cases where they

relate to the acquisition of qualifying assets, in which cases they are adjusted in the cost of the

corresponding asset. Further, as per Ministry of Corporate Affairs Notification dated 31 March 2009,

as amended vide G.S.R. 378(E) dated 11 May 2011, eligible exchange difference on foreign currency

loans utilised for acquisition of assets, up to 31 March, 2012, is adjusted in the cost of the asset to be

depreciated over the balance life of the asset.

d. The Company, as per Ministry of Corporate Affairs notification dated 31 March 2009 as amended vide

G.S.R. 378(E) dated 11 May 2011, had exercised the option of implementing the provisions of

paragraph 46 of Accounting Standard (AS - 11) “The effects of changes in Foreign Exchange Rates”

prescribed by Companies (Accounting Standards) Amendment Rules, 2006. The Company has

outstanding long term foreign currency loans which are categorised as long-term foreign currency

monetary Items utilised for the acquisitions of assets as referred in the said notification. Accordingly

the Company has capitalised exchange difference loss of 136,776,703/- [P.Y. loss 142,653,475/-] is

pertaining to the current financial year in respect of its foreign currency loans.

e. Forward Contracts

The Company uses foreign exchange forward contracts to hedge its exposure against movements in

foreign exchange rates. The use of foreign exchange forward contracts is intended to reduce the risk

or cost to the Company. Foreign Exchange forward contracts are not used for trading or speculation

purpose. Mark to Market Losses or Gains are recognized in the profit and loss account subject to (c).

above. However, Mark to Market Losses or Gains on instruments to hedge highly probable forecast

transactions which serve as effective hedges, as determined under the accounting standard 30, are

accumulated in the Hedge reserve until the underlying transaction occurs upon which the respective

accumulated balances are recognised in the profit and loss account.

In respect of foreign exchange forward contracts, difference between forward contract rate and

exchange rate (Spot rate) prevailing on the date of forward contract (i.e. forward premium / discount) is

amortized as income or expense over the life of the contract, subject to (c) above.

f. Option Contracts

The Company uses foreign exchange option contracts to hedge its exposure against movements in

foreign exchange rates. The use of foreign exchange option contracts reduces the risk or cost to the

Company. Foreign Exchange option contracts are not used for trading or speculation purpose.

Outstanding foreign exchange option contracts on the date of Balance Sheet are marked to market

(MTM). MTM losses or gains, if any, are recognised in the Profit and Loss subject to (c) above.

However, in respect of instruments to hedge highly probable forecast transactions which serve as

effective hedges as determined under the accounting standard 30, the gains and losses are

accumulated in the Hedge reserve until the underlying transaction occurs upon which the respective

accumulated balances are recognised in the profit and loss account.

(v) Employee Benefits

Termination Benefits

Termination benefits such as compensation under voluntary retirement scheme are recognised in the year


68



in which termination benefits become payable.

(vi) Warranty

Product warranty expenses are determined based on past experience and estimates, and are accrued in

the year of sale.

(vii) Research and Development

Capital expenditure incurred on research and development is capitalised as fixed assets. Expenditure

incurred on development phase, where it is reasonably certain that the outcome of development will be

commercially exploited to yield future economic benefits to the Company, is considered as an intangible

asset.

Revenue expenditure for carrying out the research activity is charged to the Profit and Loss Account in the

year in which it is incurred.

(viii) Revenue Recognition

a. Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the

goods have passed to the buyer, which generally coincides with their delivery to the buyer. Sales are

stated net of discounts, rebates and returns.

b. Export sales are accounted on the basis of the dates of “Shipped on Board” Bill of Lading and other

delivery documents as per contract.

c. Export incentives are accounted for on export of goods if the entitlements can be estimated with

reasonable accuracy and conditions precedent to claim are fulfilled.

d. Income from services is recognised on completion of services as per the terms of specific contracts.

e. Income from dividend on investments is accrued in the year in which it is declared, whereby right to

receive is established.

f. Profit / loss on sale of investments is recognised on the contract date.

(ix) Government Grant

Grants and subsidies from the Government are recognised if the following conditions are satisfied,

– There is reasonable assurance that the Company will comply with the conditions attached to it.

– Such benefits are earned and reasonable certainty exists of the collection.

The Government grants or subsidies given with reference to the total investment in an undertaking or

setting up of new industrial undertaking is treated as capital receipt and credited to capital reserve. The said

capital reserve is not available for distribution of dividend nor is considered as deferred income.

(x) Borrowing Cost

Borrowing Costs directly attributable to the acquisition, construction or production of qualifying assets are

capitalised till the month in which the asset is ready to use, as part of the cost of that asset. Other borrowing

costs are recognised as expenses in the period in which these are incurred.

Borrowing costs include foreign exchange differences on the long term foreign currency loans to the extent

they are attributable to interest differential on the said loans.

(xi) Segment Reporting

a. Identification of Segments

The Company’s operating businesses are organised and managed separately according to the nature

of products and services provided, with each segment representing a strategic business unit that

offers different products and serves different markets.

b. Intersegment Transfers

The Company generally accounts for inter-segment sales and transfers as if the sales or transfers

were to third parties at current market prices.

c. Allocation of common costs

Common allocable costs are allocated to each segment according to the sales of each segment to the


69

total sales of the Company.

d. Unallocated items

Corporate assets and liabilities, income and expenses which relate to the Company as a whole and

are not allocable to segments, have been included under unallocated items.

(xii) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication due to internal or

external factors that an asset or a group of assets comprising a Cash Generating Unit (CGU) may be

impaired. If any such indication exists, the Company estimates the recoverable amount of the assets. If

such recoverable amount of the assets or the recoverable amount (economic value in use) of the CGU to

which the asset belongs is less than the carrying amount of the assets or the CGU as the case may be, the

carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss

and is recognised in the profit and loss account. If at any subsequent balance sheet date there is an

indication that a previously assessed impairment loss no longer exists, the recoverable amount is

reassessed and the asset is reflected at recoverable amount subject to a maximum of depreciated

historical cost and is accordingly reversed in the profit and loss account.

(B) Kirloskar Pneumatic Company Limited

(i) System of Accounting

Insurance Claims are recognised upon acceptance of claim by the Insurance Companies.

(ii) Tangible Assets

i) Tangible assets are carried at cost of acquisition or construction or at manufacturing cost in case of

Company manufactured assets, less accumulated depreciation (except Freehold Land).

ii) Land and Building, Plant and Machinery at Faridabad Unit acquired before 30th June, 1984, are taken at revalued cost and those acquired after 30thJune, 1984, are valued at landed cost.

(iii) Depreciation on Assets (other than Freehold Land)

On Plant and Machinery given on Lease

Depreciation on Plant and Machinery given on Lease is being provided at the rates worked on Straight Line

Method over the primary period of Lease Agreement or at the rate specified in Schedule XIV to the

Companies Act, 1956, whichever is higher, on pro-rata basis.

Asset Primary Rate on Straight Line Method

Lease Over the primary As specified in

Period Period of Lease Schedule XIV

Plant and Machinery 8 years 12.50% 10.34%

Plant and Machinery 5 years 20.00% 10.34%

i) Depreciation on Additions to the Fixed Assets up to 31st March, 1961, is being provided on “Written

Down Value” Method in accordance with the Provisions of Section 205(2)(a) of the Companies Act,

1956, at the rates specified in Schedule XIV to the said Act.

ii) Depreciation on Additions to Assets from 1st April, 1961, to 30th September, 1987, is being provided

for on Straight Line basis in accordance with the provisions of Section 205(2)(b) of the Companies Act,

1956, pursuant to Circular No.1 / 1 / 86 / CLV No.15–(50)84 CL VI dated 21st May, 1986, issued by the

Department of Company Affairs, at the rates corresponding to the rates (inclusive of multiple shift

allowance) applicable under the Income Tax Rules, 1962 as in force at the time of acquisition /

installation and on additions on or after 1st October, 1987, on the same basis at the rates specified in

Schedule XIV to the Companies Act, 1956.

iii) Depreciation on assets of erstwhile Faridabad unit has been charged on Straight Line Method as per

rates prescribed by Schedule XIV to the Companies Act, 1956. Depreciation on additions made after

16th December, 1993, has been charged on Straight Line Method at the revised rates as prescribed in

Schedule XIV to the Companies Act, 1956 and substituted by Notification GSR No.756 (E) dated 16

December, 1993, of the Department of Company Affairs, Government of India.


70



iv) Depreciation on Additions to Fixed Assets is being provided on pro-rata basis from the month of

acquisition or installation of the said Asset, as required by Schedule XIV to the Companies Act, 1956.

v) Depreciation on Additions to Software is being provided on pro-rata basis from the month of

installation, over a period of one year.

vi) Depreciation on Additions to Vehicle is being provided on pro-rata basis from the month of acquisition

as useful life of asset is estimated as five years.

vii) Depreciation on Additions, on account of increase in rupee value due to Foreign Exchange

fluctuations, is being provided at the rates of depreciation over the future life of said assets.

viii) Depreciation on Assets sold, discarded or demolished during the year is being provided at their

respective rates up to the month in which such Assets are sold, discarded or demolished.

ix) No Depreciation is being charged on Revaluation amount of the Fixed Assets.

Intangible assets

Expenditure on acquiring Technical Know-how (intangible asset) is being amortized equally over a

period of five years or usage period whichever is lesser, after commencement of commercial

production.

(iv) Inventories

Cost of inventories have been computed to include all costs of Purchase, Cost of Conversion and other

costs incurred in bringing inventories to their present location and condition.

i) The Stocks of Raw Materials and Components, Stores and Spares are valued at cost calculated on

Weighted Average basis.

ii) The Stocks of Work-in-Progress (including factory–made components) and Finished Goods are

valued on the basis of Full Absorption Cost of attributable factory overheads or net realisable value,

whichever is lower.

iii) Goods in Transit are stated at actual cost to the date of Balance Sheet.

iv) Jigs and Fixtures, Patterns and Dies are valued at Full Absorption Cost of attributable factory

overheads and written off equally, over an estimated effective life of three years.

v) Unserviceable and Obsolete Raw Materials are valued at an estimated realisable value.

vi) Imported Materials lying in Bonded Warehouse, are valued at cost to the date of Balance Sheet.

vii) Excise / Customs Duty :

Excise Duty on Finished Goods and Customs Duty on imported materials are accounted on

production of Finished Goods / Receipt of materials in Customs Bonded Warehouse.

(v) Foreign Currency Conversion

a. Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign

currency amount the exchange rate between the reporting currency and the foreign currency at the

date of the transaction.

b. Conversion

Current assets and current liabilities, Secured Loans designated in foreign currencies are revalorised

at the rate prevailing on the date of Balance Sheet.

c. Exchange Differences

Exchange differences arising on the settlement and conversion on foreign currency transactions are

recognised as income or as expenses in the year in which they arise, except in cases where they

relate to the acquisition of qualifying assets, in which they are adjusted in the cost of the

corresponding asset. Further, as per Ministry of Corporate Affairs Notification dated 31 March 2009,

eligible exchange difference on foreign currency loans is adjusted in the cost of the asset to be

depreciated over the balance life of the asset.


71

d. Effects of changes in foreign exchange rates

The Company, in terms of Notification issued by Ministry of Corporate Affairs on 31st March, 2009, had

exercised the option of implementing the provisions of newly inserted Paragraph 46 of Accounting

Standard 11, ‘Accounting for the Effects of Changes in Foreign Exchange Rates’, prescribed by

Companies ( Accounting Standards ) Amendment Rules, 2009. The Company has outstanding long

term foreign currency loans which are categorised as Long Term Foreign Currency Monitory Item as

referred in the said notification. Accordingly 2,763,750/- being loss for the year.

(Previous year gain 1,897,500/-) has been adjusted against the cost of Fixed Assets.”

e. Forward Contracts

The Company uses foreign exchange forward contracts to hedge its exposure against movements in

foreign exchange rates. The use of foreign exchange forward contracts reduces the risk or cost to the

Company. Foreign Exchange forward contracts are not used for trading or speculation purpose.

In respect of foreign exchange forward contracts, difference between forward contract rate and

exchange rate prevailing on the date of forward contract (i.e. forward premium / discount) is amortized

as income or expense over the life of the contract, except in respect of the liabilities for the acquisition

of qualifying assets, where such amortization is adjusted in the cost of the corresponding asset.

(vi) Borrowing cost

Borrowing cost directly attributable to the acquisition / construction or production of qualifying asset are

capitalised in the month in which the said asset is ready to use, as part of the cost of that asset. Other

borrowing costs are recognised as expense in the period in which these are incurred.

(vii) Sales

i) Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the

goods have passed to the buyer, which generally coincides with the delivery to customers. Sales are

stated net of discounts, rebates, returns etc.

ii) Export Sales are accounted for on the basis of dates of Bills of Lading.

iii) Construction Contract Sales

In respect of Construction Contracts undertaken by the Company, the expenditure to the date of Balance

Sheet on incomplete contracts wherein profit cannot be estimated reliably, is recognised as sales to the

extent recoverable from the customer.

(viii) Segment Reporting

1. Segments have been identified in line with the Accounting standard, AS-17 “Segment Reporting”

(AS-17), taking in to account the organisation structure as well as the differing risks and returns.

2. The Company has disclosed Business Segment as the primary segment.

3. Composition of Business Segment

Name of the Segment Comprises of

a) Compression Systems Air and Gas Compressors, Airconditioning and

Refrigeration Compressors and Systems etc.

b) Transmission Equipments Power Transmission Equipments (Torque Convertor),

Reverse Reduction Gears for Marine Gear Engines,

Industrial and Mobile application etc.

4. The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to

each of the segment and amounts allocated on reasonable basis

5. The Accounting Policies of the Segments are the same as those described in the Significant

Accounting Policies.


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PART C : CONSOLIDATED OTHER NOTES

NOTE C - 1

During the year the Company has acquired additional equity shares of the following companies and has become the holding

company of these companies –

– Kirloskar Oil Engines Limited

– Kirloskar Pneumatic Company Limited

NOTE C - 2

The effect of acquisition of subsidiary companies :

Acquisition of Kirloskar Oil Engines Limited (KOEL) and Kirloskar Pneumatic Company Limited (KPCL) has resulted in :

An increase of 6,396,785,479/- in the financial position of the Company for the current year ended 31 March, 2012 and an

increase of 882,811,343/- in the group profit of the current year net of minority interest.

NOTE C - 3 : EARNING PER SHARE (BASIC AND DILUTED)

[in `]

I-Basic 2011-12 2010-11

Profit for the year before tax 4,865,509,393 354,692,153

Less : Attributable tax thereto 1,393,112,703 9,441,845

Profit after tax 3,472,396,690 345,250,308

Less : Preacquisition profit 523,624,364 –

Less : Minority interest 560,444,634 –

Post acquisition profit for the year 2,388,327,692 345,250,308

Total Number of equity shares at the end of the year used as denominator 5,288,718 5,288,718

Basic earning per share of nominal value of 10/- each 451.59 65.28

II-Diluted

Profit for the year before tax 4,865,509,393 354,692,153

Less : Attributable tax thereto 1,393,112,703 9,441,845

Profit after tax 3,472,396,690 345,250,308

Less : Preacquisition profit 523,624,364 –

Less : Minority interest 560,444,634 –

Post acquisition profit for the year 2,388,327,692 345,250,308

Weighted average number of shares outstanding used as denominator 5,288,718 5,288,718

Diluted earning per share of nominal value of 10/- each 451.59 65.28

NOTE C - 4 : CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts remaining to be executed

on capital account and not provided for 248,687,782 –

b) Guarantees given by Company’s Bankers for Contracts underaken by

the Company are secured by a First Charge on Company’s

Inventories (excluding Stores and Spares relating to Plant and

Machinery) Outstanding Bill and Second Charge on Fixed Assets.

Amount outstanding as on 31 March 2012 1,388,346,356 –

c) Purchase of Bearings from KSPG Automotive India Pvt.

Limited on a non exclusive basis 1,180,000,000 –

73

[in `]

2011-12 2010-11

NOTE C - 5 : CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF

a) Guarantees 147,220,786 –

b) Central Excise (Matter Subjudice) 12,752,455 –

c) Sales Tax (Matter Subjudice) 62,105,074 –

d) Income Tax (Matter Subjudice) 140,231,783 –

e) Disputed Customs Duty demands 10,798,507 –

f) Claims against Company not acknowledged as debts 1,126,998,373 –

g) Stamp duty (Matter Subjudice)

(for Kirloskar Brothers Investments Limited) 5,560,121 5,560,121

h) Tax on non utilisation of Land (for Nashik Silk Industries Limited) 2,726,125 2,726,125

Note : Previous year figures in respect of Kirloskar Oil Engines Limited and Kirloskar Pneumatic Company Limited

are not given as they have become subsidiaries in the current year.

i) Claim for US $ 10 million has been filed against the Company (Kirloskar Pneumatic Company Limited) in the

International Court of Arbitration. The Arbitration proceedings have been stayed by the Honorable High Court of

Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the

Honorable Supreme Court. Further the Honorable High Court of Delhi has transferred the matter to District

Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior

Counsel stating that claim made by the plaintiff is not tenable.

j) The Company (Kirloskar Oil Engines Limited) has imported Capital Goods under the Export Promotion Capital

Goods Scheme of the Government of India, at concessional rates of duty on an undertaking to fulfill quantified

exports against which, remaining future obligations aggregates USD 64.20 million (previous year USD 110.09

million). Non fulfillment of the balance of such future obligations, if any, entails options / rights to the Government

to confiscate capital goods imported under the said licenses and other penalties under the said scheme.

Minimum Export obligation to be fulfilled by the Company under the said scheme, by March 31, 2012 has been

fulfilled.

NOTE C - 6 : RELATED PARTY DISCLOSURES

(A) Names of the related party and nature of relationship where control exists

Sr. No. Name of the related party Nature of relationship Effective Date


2. Kirloskar Pneumatic Company Limited Subsidiary Company From 20.05.2011

3. Kirloskar Oil Engines Limited Subsidiary Company From 24.05.2011

4. Kirloskar RoadRailer Limited Subsidiary Company of

Kirloskar Pneumatic

Company Limited From 06.05.2011

5. Kirloskar Chillers Private Limited Associate of Kirloskar

Pneumatic Company Limited

6. Pooja Credits Private Limited Subsidiary Company Upto 31.03.2011

PART C : CONSOLIDATED OTHER NOTES (CONTD.)

74



(B) Disclosure of related parties transactions

Previous years figures in respect of Kirloskar Oil Engines Limited and Kirloskar Pneumatic Company Limited are not given as they have become subsidiaries in the current year.

[in ]

Sr. No. Nature of transaction / relationship / major parties 2011-12 2010–11

Amount Amount for Amount Amount for

major parties* major parties*

1. Purchase of goods and services

Enterprises over which key

management personnel or their relatives

exercise significant influence 75,375 –

Kirloskar Integrated Technologies Limited 75,375 –

Associate of KPCL 55,839 –

Kirloskar Chillers Private Limited 55,839 –

TOTAL 131,214 –

2. Sale of goods /

contract revenue and services


management personnel or their

relatives exercise significant influence 3,061,154 –

Kirloskar Integrated Technologies Limited 3,061,154 –



TOTAL 3,525,976 –

3. Sales Return



relatives exercise significant

influence 84,327,022 –


TOTAL 84,327,022 –

4. Purchase of Fixed Assets




influence 6,930,876 –


TOTAL 6,930,876 –

5. Rendering Services





TOTAL 1,058,880 –

`


75


6. Receiving Services

Key Management Personnel 143,208,692 –

Mr. Atul C. Kirloskar 40,307,997 –

Mr. Gautam A. Kulkarni 41,041,825 –

Mr. R. R. Deshpande 23,411,290 –

Mr. Rahul C. Kirloskar 32,863,649 –

143,208,692 –




Kirloskar Consultants Limited 1,104,657 –

1,104,657 –

TOTAL 144,313,349 –

7. Dividend paid

Key Management Personnel 23,475,628 –




23,475,628 –

Relatives of Key Management Personnel 44,444,216 –

Mrs. Alpana R.Kirloskar 14,400,000 –

Mrs. Arti A. Kirloskar 14,400,000 –

Mrs. Jyotsna G. Kulkarni 15,429,000 –

44,444,216 –

TOTAL 67,919,844 –

8. Dividend received

Associate of KPCL 7,350,000 –

Kirloskar Chillers Private Limited 7,350,000 –

TOTAL 7,350,000 –

9. Remuneration Paid

To Key Management Personnel 32,442,819 4,487,917

Mr. A. C. Kulkarni 4,982,438 4,487,917


Mr. Aditya Kowshik 18,954,136 –

TOTAL 32,442,819 4,487,917

10. Expenses





TOTAL 22,039,522 –

11. Reimbursement of Expenses

Enterprises over which key managerial

personnel or their relatives exercise

significant influence 110,000 –

Kirloskar Integrated Technologies Limited 110,000 –

TOTAL 110,000 –




76

[in `]



12. Rent paid

Relatives of Key Management Personnel 5,400,000 –



Mrs. Suman C. Kirloskar 1,800,000 –

TOTAL 5,400,000 –

13. Rent received



TOTAL 462,000 –

* “Major parties” denote entities who account for 10% or more of the aggregate for that category of transcations.




(C) Amount due to / from related parties

[in `]

Sr. No. Nature of transaction / relationship / major parties 2011–12 2010–11

1. Accounts receivable

Enterprises over which key managerial personnel or

their relatives exercise significant influence

Kirloskar Integrated Technologies Limited 104,158,293

Associate of KPCL


Relatives of Key Management Personnel

Mrs. Suman C. Kirloskar 10,000,000 –

TOTAL 114,169,598 –

2. Amount Due

Key Management Personnel

Commission



Mr. R. R. Deshpande 15,000,000 –


Mr. Nihal G. Kulkarni 3,490,000 –

Mr. Aditya Kowshik 12,500,000 –

Mr. A. C. Kulkarni 2,000,000 1,500,000

Retirement Benefit-Superannuation

Mr. Gautam A. Kulkarni 900,000 –

Mr. Rahul C. Kirloskar 585,484 –

Mr. R. R. Deshpande 514,000 –

Mr. Atul C. Kirloskar 900,000 –

Mr. Nihal G. Kulkarni 206,613 –

TOTAL 111,156,097 1,500,000

–


77

[in `]

(D) Names of related parties with whom transactions have been entered into

1. Key Management Personnel Mr. Atul C. Kirloskar

Mr. Gautam A. Kulkarni

Mr. Rahul C. Kirloskar


Mr. R. R. Deshpande

Mr. Aditya Kowshik

Mr. A. C. Kulkarni

2. Relatives of Key Management Mrs. Alpana R. Kirloskar Wife of Mr. Rahul C. Kirloskar

Personnel Mrs. Arti A. Kirloskar Wife of Mr. Atul C. Kirloskar

Mrs. Jyotsna G. Kulkarni Wife of Mr. Gautam A. Kulkarni

Mrs. Neeta A. Kulkarni Mother of Mr. Gautam A. Kulkarni

Mrs. Suman C. Kirloskar Mother of Mr. Rahul C. Kirloskar

and Mr. Atul C. Kirloskar

3. Associate Companies of Kirloskar Chillers Private Limited

Kirloskar Pneumatic Company Limited

4. Enterprises over which key Kirloskar Integrated Technologies Limited

managerial personnel or their Kirloskar Consultants Limited


influence

Sr. No. Nature of transaction / relationship / major parties 2011–12 2010–11

3. Security Deposit Receivable

Relative of Key Management Personnel



TOTAL 20,000,000 –

4. Investment

Associate of KPCL

Kirloskar Chillers Private Limited 4,900,000 –

TOTAL 4,900,000 –

* “Major parties” denote entities who account for 10% or more of the aggregate for that category of transcations


78

[in `]




79

NOTE

Subsidiaries of the company operate in various segments. Results of Kirloskar Brothers Investments Limited and

Nashik Silk Industries Limited are included under ‘Others’ category.

Details of Segment Reporting

[in `]

Sr. No. Particulars Compression Transmission Engines Others Total

Systems Equipments

A. Information about Business Segment – Primary 2012

1. Segment revenue

Sales 5,781,278,792 884,862,546 22,532,796,602 1,991,988,543 31,190,926,483

Less: inter segment revenue 81,605,950

Net revenue from operations 5,781,278,792 884,862,546 22,532,796,602 1,991,988,543 31,109,320,533

2. Result

Segment Result – Profit 1,094,429,953 46,229,799 2,319,338,554 1,165,103,664 4,625,101,970

Less: unallocable corporate expenses – 411,962,904

Operating profit before interest 5,037,064,874

Less: interest 171,555,481

Profit before tax 4,865,509,393

3. Other information

Segment assets 2,336,405,941 802,093,061 11,514,115,469 6,367,546,511 21,020,160,981

Add: Unallocable common assets 1,693,295,544

Total assets 22,713,456,525

Segment liabilities 1,656,733,609 257,558,189 4,424,668,546 554,082,285 6,893,042,629

Add: unallocable common liabilities 491,844,762

Total liabilities 7,384,887,391

4. Capital expenditure during the year 115,161,915 3,799,051 817,338,744 177,760,108 1,114,059,818

5. Depreciation 75,416,114 44,689,348 871,395,567 41,870,419 1,033,371,448

Add: unallocable depreciation 451,696

1,033,823,144

B Secondary segment – geographical by customers

Segment revenue

In India 30,789,498,219

Outside India 319,822,314

TOTAL 31,109,320,533

Notes :

1. Others category includes figures of Kirloskar Brothers Investments Limited and Nashik Silk Industries Limited

and others category of Kirloskar Oil Engines Limited.

2. Figures of the previous year are not disclosed since Kirloskar Brothers Investment Limited operates only one

segment i.e. investments and hence Accounting Standard 17 on Segment Reporting was not applicable to it.

The above segments are of its subsidiary companies which have become its subsidiaries in the current year.

C - 7 : SEGMENT REPORTING

NOTE

Consolidated figures for the year ended 31st March 2012 are not comparable with previous year figures, as Kirloskar Oil

Engines Limited and Kirloskar Pneumatic Company Limited have become subsidiaries of the company during the year.

NOTE C - 9

Figures have been regrouped, wherever necessary.

C - 8




Pune : 24 May 2012


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Regd. Office: 13/A, Karve Road, Kothrud, Pune - 411 038, INDIA.

Tel.:+91 (20) 2545 3002 Fax:+91 (20) 2543 4262

E-mail: [email protected] | Website: www.kbil.co.in

KIRLOSKAR BROTHERS INVESTMENTS LIMITED

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